CASE 2- LAW OF CREDIT AND FINANCE

Adelaide had saved a considerable sum of money over the years. She was very proud of her niece, Elandra, who had incorporated and started her own horseracing stable, which had become quite successful and quickly grown to four horses. Elandras horses had done very well at the racetrack and she was in the process of planning the next stage in the development of her racing stable. To make her plans a reality, Elandra required financing of $100,000.00. She was experiencing difficulty in finding the money because of the risky nature of horse racing and the fact she had been in operation for only four years.

Adelaide believes Elandra has what it takes to be a success and wants to help her by investing in the racing stable. Adelaide also wants to make sure that the risk to her investment is minimal. Adelaide heard that you took an excellent business course at college and has come to you for advice.

Please advise Adelaide on:

The options available for investing in Elandras business. [LO 11.3]

The process involved with each form of investment. [LO 11.3]

The risks and benefits associated with each form of investment. [LO 11.3]