entrepreneurship

1. discuss what steps craig took to develop and grow his business. (7 mark

2. illustrate the role craig played in contributing towards the economy (8 mark

clearrisk | craig ro

business is risky, but that is craig rowe's business - risk management to be precise. crai

the president of clearrisk inc., becomes animated and energized as he explains his line

work. "risk," he says, "is not negative. it is when there is opportunity for a downside or

upside." risk management is about formalizing the decision making process. people a

constantly assessing risks, whether it is instinctively in crossing the street or deliberately

weighing the pros and cons of buying a car. "business people," he says, "engage in the sa

process whether in deciding where to build a head office or whether to buy another company

the entreprene

craig spent almost 20 years in the insurance industry, where he started right out of hi

school. over the years, he attained various insurance designations and completed ma

business courses and ample on-the-job training. craig is naturally entrepreneurial and al

operated his own consulting company and became involved in several insurance indust

associations. this allowed him to develop a large network of connection

craig found himself thinking and talking more and more about risk management. he realiz

that if businesses did some basic things to manage risk they would save money. in 2001

wrote a book on the topic and later adapted the ideas in to a workshop which he present

throughout canada and the united states. insurance industry professionals and other busine

people noticed craig and saw the logic in his message. soon he was being invited to speak

various associations and was asked to assist in writing material on risk management. wh

dealing with clients of his consulting business, he noticed the same set of steps and questio

could be applied to different realities in different types of companies. he was sure that the

was something that could be packaged and sold to assist these companie

he went in search of risk management software. he found some, but none applicable to sma

and mid-sized companies and organizations. so he decided to build it. he teamed with dav

d'entremont who had the background provide technical expertise. together they found

clearrisk. they developed a business plan which became their roadmap, even though it w

constantly being adapted to take into account new realities, circumstances and goals. craig estimates they are on version 30 by no

craig decided to leave his job and pursue clearrisk full-time. it was not an easy decision

make as craig had a young family at the time. he had to engage in his own risk manageme

process and weigh his options. he had almost 20 years of solid insurance industry experienc

he had an extensive network of contacts. he had entrepreneurial experience through h

consulting business. he knew the market. he knew what his customers needed and he kn

that he could develop a product to meet that need. he found a solid business partner

complement his skills. so the timing was right and after 10 years of thinking, dreaming a

percolating ideas, craig made the leap in 200

craig says that the biggest challenge facing clearrisk and any business, whether it is

starting, sustaining or growing the business, is cash. clearrisk needed capital to develop i

product. for any business to have credibility with lenders and investors, that initial money h

to come from the business owner. craig and david secured an operating line of credit from t

bank based on personal guarantee

step 2 was to seek more financing to start implementing the business. craig says that it

important to look for money before you need it because you are building relationships a

confidence and convincing people that you are creditworthy. a business plan is a necessity b

"everyone invests in people." this applies to accessing financing from business developme

bank of canada (bdc), atlantic canada opportunities agency (acoa), or any governme

organization, as well as private lenders and investors. it is necessary to raise private money

leverage government mone

another important factor in developing clearrisk was being accepted by memorial university

genesis centre, a facility which provides business and technical support to new and emergi

technology businesses. this added to their credibility and attracted the attention of ang

investors. angel investors are business people with financial resources available to invest

new promising businesse

technological businesses are expensive to grow and clearrisk's growth has been ma

possible by private investors and organizations such as growth works (a venture capit

company). ownership of the company is now shared with these investors and clearrisk is

corporation with multiple shareholders. one of the tradeoffs in taking money from investors

that ownership becomes shared. craig says, "you can have a big piece of something small

a small piece of something big." he chose the latte

craig's idea has grown immensely. he keeps the numbers to himself, but says sales ha

grown exponentially. his primary market is north america and the clearrisk software has be

launched in french and spanish. customers do not pay an upfront fee; instead, they pay

annual fee for the software and support. clearrisk is constantly improving its products. t

team is always enhancing features and improving functionality. currently, they offer thr

programs to consumers: clearrisk? manager, which enables an organization to build a

implement a risk management plan; clearrisk? tracker, which facilitates tracking insuran

claims; and clearrisk? trainer, an online instructional program which increases awareness

risk and its management. the latter two products are offered in partnership with oth

organization

clearrisk's web-based business is global; however, craig is cautious about expanding beyo

north america. the insurance industries in the usa and canada are relatively interconnect

and homogeneous. it would be very difficult to provide support to countries with differe

regulations and different languages. clearrisk offers a web-based software service so th

use web-based marketing, rarely using traditional media. they access all forms of social med

such as facebook, twitter, myspace, and blogs and find the approach cost effective and hi

impact. social media facilitates the use of in-bound marketin

in addition to web-based marketing, clearrisk is now getting calls from referrals. clients a

spreading the word to other businesses seeking a similar product. the demand for clearrisk

product is expanding but craig resists growing the team too quickly. craig prefers a small te

and likes the dynamics of small groups. however, more sales people are needed and they will co-

and computer science students to his company. he likes to hire young people. it

rewarding to see them take shape and become leader

craig speaks favorably about starting a new business in newfoundland and labrador.

says that the provincial climate is positive. in addition to the practical and financial suppo

available, the provincial government has done a lot to assist business in recent years, includi

reducing taxes and red tape and increasing fundin

when craig reflects on the path his career has taken, he gives special acknowledgement

paul johnson of johnson insurance as a business icon and an inspiration. mr. johns

inherited his father's small insurance office and built it into an innovative, billion-doll

company. not only was mr. johnson a great businessman, he was a community-mind

philanthropist. this is evident today throughout the capital city in the parks, trail ways, and t

johnson geo on signal hill. mr. johnson has influenced craig's professional a

community life. in addition to craig's entrepreneurial success he is firmly rooted in h

community; he currently serves as chair of the ym/ywc

craig has advice for young people who dream of starting their own businesses. he says to

informed, to go in with open eyes and to seek honest opinions from knowledgeable people.

advises that an entrepreneur should realize that "the odds are against you, but you need t

tenacity and perseverance to stick with it. it is important to understand your industry,

understand the need for your product or service and ultimately to understand the risks befo

you make the leap." in business, managing risk is everyone's busines

1. discuss what steps craig took to develop and grow his busines

2. illustrate the role craig played in contributing towards the economys.s!retohehebea.isndheedarontog.ngrthes.isopam'sreg.ghiaeyntednds.erofcendeeheanenver.oris aaldes.inelng'sy.tontntutndiss.heastsin6.ndtoewise.nttow!asedidlls.rensentossedheeds.rysonyghur."meinreanofg,wes)s)." In business, managing risk is everyone's business!

1. Discuss what steps Craig took to develop and grow his business.

2. Illustrate the role Craig played in contributing towards the economy.

Part B.

Mean Beans, a local coffee shop, has the following assets on January 1, 2020. Mean Beans prepares annual financial statements and has a December 31, 2020 year-end. The company's depreciation policy is to use the straight-line method to depreciate its assets. a. On January 1, 2020, purchase equipment costing $15,000 with on estimated life of five years. Mean Beans will scrap the equipment after five years for $0. b. On July 1, 2020, purchase furniture (tables and chairs) costing $12,000 with on estimated life of ten years. Mean Beans estimates that it can sell the furniture for $2,000 after ten years. c. On January 1. 2018. Mean Beans had purchased a car costing $25,000 with an estimated life of eight years. Mean Beans estimates that it can sell the car for $5,000 after eight years. Required: 1.a. For each transaction, calculate the annual depreciation expense. rd |Annual depreciation expense on equipment Annual depreciation expense on fumiture Annual depreciation expense on car 1-b. For each transaction, record the adjusting entry on December 31. 2020. View transaction list Journal entry worksheet Record annual depreciation on equipment. Date General Journal Debit Credit Dec 31, 2020QUESTION 3 Poole Company maintains four special journals and a general journal to record its transactions. Using the code below, indicate in the space provided the appropriate journal for recording the transactions listed A. Mr. Jones invested cash in the business. C. Sold merchandise to a customer on account. A. Cash Receipts Journal D. v Purchased a 2-year auto insurance policy for cash. B. Single column Purchases journal B. * Purchased inventory to be resold on account. C. Sales Journal D. Cash Payments Journal Issued an account credit memorandum to a customer who returned defective merchandise previously sold on account. E. General Journal Purchased office equipment for cash.'s of E19.1 (LO 1) Justin Bleeber has prepared the following list of statements about managerial accounting. financial accounting, and the functions of management. 1. Financial accounting focuses on providing information to internal users. 2. Staff positions are directly involved in the company's primary revenue-generating activities. 3. Preparation of budgets is part of financial accounting. 4. Managerial accounting applies only to merchandising and manufacturing companies. 5. Both managerial accounting and financial accounting deal with many of the same economic events. 6. Managerial accounting reports are prepared only quarterly and annually. 7. Financial accounting reports are general-purpose reports. 8. Managerial accounting reports pertain to subunits of the business. 9. Managerial accounting reports must comply with generally accepted accounting principles. 10. The company treasurer reports directly to the vice president of operations. Instructions Identify each statement as true or false. If false, indicate how to correct the statement.13.23 Advanced: Calculation of NPV and IRR, a discussion of the Inconsistency In ranking and a calculation of the cost of capital at which the ranking changes. A company is considering which of two mutually exclusive projects it should undertake. The finance director thinks that the project with the higher NPV should be chosen, whereas the managing director thinks that the one with the higher IRR should be undertaken, especially as both projects have the same initial outlay and length of life. The company anticipates a cost of capital of 10 per cent and the net after tax cash flows of the projects are as follows: Project X Project Y (EOOO) (1000) Year 0 -200 200 35 218 80 10 UI AWNP 90 10 75 20 here to search O 1 2 XQUESTION 3 STAGE 1 the project . The directors of Standacone Limited have appointed you as a merger and acquisition specialist, They are considering the take-over of Allied Conveyors Limited and you are to advise them whether or not to proceed with (25) The following market information is supplied to you: Earnings Per Share Market price Standacone 315 c Per Share Number Allied Conveyors 252 c R 4.00 Of shares R. 3.00 3 million Additional information: 1 million Cash payment of R5 million to Allied Conveyors Limited Synergy of R6 million will benefit the takeover Required: 3.1 Calculate the value of the proposed take-over 3.2 Calculate the net present value of the take-over 3.3 Calculate the take-over premium 3.4 Calculate the post-take-over market price of the share NONEW 3.5 Calculate the post-take-over increase/decrease price of the share Assume the take-over was based on earnings per share 3.6 Calculate the exchange ratio based on earnings per share 3.7 Calculate the total number of shares in the take-over 3.8 Calculate the post-take-over earnings per share 3.9 Calculate the benefits, if any, to the companies. (25) QUESTION 4 (6) 4.1 Discuss dividend payout policy and whether it has an impact on share price. (6) 4.2 Explain why the different sources of capital have different levels of risk and return. 4.3 Discuss whether the dividend growth model or the capital asset pricing model should be used to calculate (6) the cost of equity. 4.4 Using the dividend growth model, an analyst has estimated that her company's cost of equity capital is 13%% per annum. The current ex-dividend share price is 345.5 Rand, and the current dividend is 14 cents per share Do calculations to show what rate of dividend growth the analyst is assuming. Required: Determine the rate of dividend growth that the analyst is assuming. Use calculations to support (7) your