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Maggy recently purchased a share of common stock in Company X for $34.78. Company is the developer and manufacturer of medically questionable devices it claims
Maggy recently purchased a share of common stock in Company X for $34.78. Company is the developer and manufacturer of medically questionable devices it claims will rid the human body of all viruses. The business is valued at $950,000 and has a capital structure consisting of $575,000 of debt and $55,000 of preferred stock, in addition to its 9,200 shares of common stock. Unfortunately, within 24 hours of Maggy's purchase of the share, Company X was sued for $7 quattuorvigintillion (that's a 7 followed by 75 zeros). 1 2 Regarding the lawsuit, what is Maggy's maximum hability? $0.00 b. $34.78 $7 quattuorvigintillion d None of the above. C. ANSWER: 2. The lawsuit was eventually dismissed, but not before Company X was forced to go out of business. If the business was only valued at $500,000, how much will the holders of preferred stock receive? $0.0 b. $34.78 C. Either of the above d None of the above 3. If you wanted to save for a house and targeted to have $750,000 of cash savings 25 years from now, how much would need to invest today? 2. 4. Which of the following statements is the most accurate? It is generally more expensive to fom a sole proprietorship than a C corporation because, with a sole proprietorship, extensive legal documentation is required. b. C corporations face fewer regulations than sole proprietorships. One disadvantage of operating a business as a sole proprietorship is that the firm is subject to double taxation, at both the firm level and the owner level. d. One advantage of forming a C corporation is that equity investors are exposed to less liability than if they were investors in a sole proprietorship c
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