Bill Jobs has decided to start a computer company called Coton in Joplin. He knows that many MSSU students, who are now required to own and operates personal computer, are having difficulty setting up their computers, accessing various materials from MSSU's network and from the internet, and installing new programs as they become available. Bill's plan is to provide a service to the students by helping students set up their computers, show them how to access various databases, and offer an e-mail help desk for any problems that arise. Bill also wants to develop a website that will be a seamless portal to the intemet and the campus intranet If things go well, Bill plans to sell computers with all the required software preinstalled to students, and develop the website that includes links to various businesses and services that students like, and to offer advertising services and charge for the links) to local businesses. For example, a student could use the web site to order pizza delivery while studying for a financial management exam Once Bill has established CompU and developed the necessary operating procedures, he plans to expand to other colleges and universities in the area, and eventually go nationwide. At some point Bill plans to take Comall public with an IPO. 1. When Bill first begins Compl. if he is the only employee and only his money is invested in the company, would any agency problems exist? As he expands and hires additional people at Comol. might agency problems arise? When Bill first begins, what type of business organization will Comp be? 2. If Bill needs capital to buy his computer inventory to sell to students or develop software to run the website and the business, might this lead to agency problems? Would it matter if the new capital came in the form of an unsecured bank loan, a bank loan secured by the inventory, or from new stockholders (if Bill incorporates Compt? What other sources of capital could Bill use? 3. Would potential agency problems increase or decrease if Bill expands operations to other campuses? Would the agency problems be affected by whether he expands by licensing franchisees or by direct expansion, where Comou actually owns the businesses on other campuses and operates them as divisions of Compu? 4. What action or actions can you think of that might minimize agency problems for Compl), as Bill expands beyond MSSU? Would going public in an IPO increase or decrease agency problems? 5. If Comnul is successful, what kind of compensation program could Bill use to minimize agency problems 6. If Bill hires someone whom he can train to manage one of the new divisions he plans to open at other campuses, would it matter whether or not that person understood something about financial management? If two people were applying for a job that would lead to a managerial position, should Bill be interested primarily in the person's technical skills or in a combination of technical skills and a vision of how different functions within Complifit together? 7. Compis successful, and the before-tax earnings for the first year are $90,000. Calculate the tax on these earnings using Table 12