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Harry has just started a business with $500,000 of assets, funded by $300,000 of personal funds and $200,000 debt. Unfortunately, on the opening day, before
Harry has just started a business with $500,000 of assets, funded by $300,000 of personal funds and $200,000 debt. Unfortunately, on the opening day, before Harry could take out an insurance policy and before he could make any sales, a customer, Julie, injures herself on business premises and successfully sues for medical bills of $800,000. All business assets can be sold at cost to cover part of the medical expenses. Assume Harry has $400,000 of personal assets, including his $300,000 investment in the business. Which of the following statements is NOT correct? O a. If Harry is a sole trader, his return on equity will be -133%. O b. If Harry set this business up as a private company as the sole shareholder, his return on equity will be -100%. O c. If Harry has set the business up as a partnership with Sandra, both partners will be personally liable for the costs of winding up the business and the law suit. O d. If the business is set up as a company, the customer, Julie, will receive $400,000 towards her medical bill. O e. If the business is set up as a sole trader, Julie will receive $500,000
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