1. Why Is Corporate Finance Important To All Managers?

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Mini Case (p. 45) A. Why is corporate finance important to all managers? Managers of a company must know the finance of a company as this help managers to know the health of the company and can act accordingly with a common guideline .Suppose a marketing manager going to market to sell the company’s products .and he does not know the company is running financial trouble and products are not matching proper quality standards and unfortunately the products are sold to the customers .The products fail to produce good result .Imagine what would be the condition of the company with so much adverse impact

B. Describe the organizational forms a company might have as it evolves from a start-up to a major corporations. List the advantages and disadvantages of each form. SOLE PROPRIETORSHIPS
 A sole proprietorship is a business owned and managed by one individual. A sole proprietorship is not a legal entity. It refers to an individual who owns the business and is personally responsible for its debts. Owners may freely commingle business and personal assets. Owners cannot raise capital by selling and interest in the business. The owner reports all income and expenses on the owner’s personal tax return. The business terminates on the owner’s death or withdrawal. However, an owner can sell the business, but can no longer remain the proprietor.
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What three aspects of cash affect the value of any investment? (1) amount of expected cash flows; (2) timing of the cash flow stream; and (3) riskiness of the cash flows.

F. What is free cash flow? A measure of financial performance calculated as operating cash flow minus capital expenditures. Free cash flow (FCF) represents the cash that a company is able to generate after laying out the money required to maintain or expand its asset base. Free cash flow is important because it allows a company to pursue opportunities that enhance shareholder value. Without cash, it is tough to develop new products, make acquisitions, pay dividends, and reduce debt

G. What is the weighted average cost of capital? A calculation of a firm's cost of capital in which each category of capital is proportionately weighted. All capital sources - common stock, preferred stock, bonds and any other long-term debt - are included in a WACC calculation. All else equal, the WACC of a firm increases as the beta and rate of return on equity increases, as an increase in WACC notes a decrease in valuation and a higher risk.

H. How do free cash flow and the weighted average cost of capital interact to determine a firm’s

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