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Fin 512 Midterm

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Submitted By Val299
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Entrepreneurial Finance Fin512
Fall 2014

1. (TCO B) Which of the following best defines a partnership? (Points : 5) A business owned and operated by one person A voluntary association of two or more persons to carry on a business for profit as co-owners The governing body for corporate activity An organization in which each owner has limited personal liability

2. (TCO D) The financial forecasting process used to project financial statements consists of which of the following processes? (Points : 5) Project sustainable growth rate Project balance sheet Forecast sales Forecast consumer demand and interest rates on borrowing Project Income Statement

Page 2

1. (TCO C) What is meant by the terms depreciation and accumulated depreciation? In which financial statement does each of these items appear? What is accrual accounting and how does it influence financial statement presentation? (Points : 30)

2. (TCO B) Six months ago, you invested $350,000 to become a partner in a medical practice in which you have a 50% ownership interest. Today, your partner defaulted on the payments for a $2 million Open MRI system that is used by the partnership. What is the dollar amount of your personal liability exposure if you are a) the general partner, and b) if you are a limited partner? Discuss the characteristics of general and limited partners, and how these influence the liability amounts. (Points : 30)

3. (TCO C) ServerSolutions’ management has asked you to help the firm identify its EBDAT breakeven level. The company has only one product, the Pinnacle Server, a blazing fast network server that accelerates corporate database network access. The firm’s servers sell for $4,500 each. Each server costs $3,000 in materials and manufacturing costs (all production is outsourced to an

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