Angelica wants to open a restaurant and is thinking of setting it up as a corporation. What are the advantages and disadvantages she will face by setting up the business as a corporation as opposed to a sole proprietorship or a partnership?
What will be an ideal response?
As a corporation, Angelica has the advantages of limited personal liability and a greater ability to raise funds. The disadvantages include the cost to organize the business as well as the possible double taxation of income at both the corporate level and at the income level for shareholders who earn dividends.
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When the housing bubble began to burst in 2006, investors became
A) more likely to purchase mortgage-backed securities since mortgage values had declined significantly, making the securities a better value. B) less likely to purchase mortgage-backed securities since the default rate on mortgages began to rise. C) more likely to purchase mortgage-backed securities since the higher rate of return made these investments much more profitable. D) less likely to purchase mortgage-backed securities since the government virtually took over the mortgage market.
Refer to the table below. If the discount rate is 5 percent and the cost of the investment is $45,000, which of the following is true regarding a profit-maximizing manager?
The above table shows the future operating profits from an investment. The future operating profits are earned at the end of each of the respective years.
A) The manager should not make the investment because the net present value is positive.
B) The manager should not make the investment because the net present value is negative.
C) The manager should make the investment because the net present value is positive.
D) The manager should make the investment because the net present value is negative.
When an individual is unable to alter or undo a past decision he/she incurs an opportunity cost
Indicate whether the statement is true or false
Suppose a profit-maximizing monopolist faces a constant marginal cost of $10, produces an output level of 100 units, and charges a price of $50 . The socially efficient level of output is 200 units. Assume that the demand curve and marginal revenue curve are the typical downward-sloping straight lines. The monopoly deadweight loss equals $4,000
a. True b. False Indicate whether the statement is true or false