Exam3Scenarios
Exam 3 Scenarios
Sample Exam 3
Scenario 1
The Friendly Market is a large supermarket located in a city in the Southwest. "Friendly's," as it is popularly known, has more sales per square foot than any of its competitors because it lives up to its name. The personnel go out of their way to be friendly and helpful. If someone asks for a particular brand-name item and the store does not carry it, the product will be ordered. If enough customers want a particular product, it is added to the regular line. Additionally, the store provides free delivery of groceries for senior citizens, check-cashing privileges for its regular customers, and credit for those who have filled out the necessary application and have been accepted into the "Friendly Credit" group. The owner, Charles Beavent, believes that his marketing-oriented approach can be successfully used in any area of the country. He therefore is thinking about expanding and opening two new stores, one in the northern part of the city and the other in a city located 50 miles east. Locations have been scouted, and a detailed business plan has been written. However, Charles has not approached anyone about providing the necessary capital. He estimates he will need about $3 million to get both stores up and going. Any additional funding can come from the current operation, which throws off a cash flow of about $100,000 monthly. Charles feels that two avenues are available to him: debt and equity. His local banker has told him the bank would be willing to look over any business plan he submits and would give him an answer within five working days. Charles is convinced he can get the bank to lend him $3 million. However, he does not like the idea of owing that much money. He believes he would be better off selling stock to raise the needed capital. Doing so would require him to give up some ownership, but this is more agreeable to him than the alternative. The big question now is, How can the company raise $3 million
Sample Exam 3
Scenario 1
The Friendly Market is a large supermarket located in a city in the Southwest. "Friendly's," as it is popularly known, has more sales per square foot than any of its competitors because it lives up to its name. The personnel go out of their way to be friendly and helpful. If someone asks for a particular brand-name item and the store does not carry it, the product will be ordered. If enough customers want a particular product, it is added to the regular line. Additionally, the store provides free delivery of groceries for senior citizens, check-cashing privileges for its regular customers, and credit for those who have filled out the necessary application and have been accepted into the "Friendly Credit" group. The owner, Charles Beavent, believes that his marketing-oriented approach can be successfully used in any area of the country. He therefore is thinking about expanding and opening two new stores, one in the northern part of the city and the other in a city located 50 miles east. Locations have been scouted, and a detailed business plan has been written. However, Charles has not approached anyone about providing the necessary capital. He estimates he will need about $3 million to get both stores up and going. Any additional funding can come from the current operation, which throws off a cash flow of about $100,000 monthly. Charles feels that two avenues are available to him: debt and equity. His local banker has told him the bank would be willing to look over any business plan he submits and would give him an answer within five working days. Charles is convinced he can get the bank to lend him $3 million. However, he does not like the idea of owing that much money. He believes he would be better off selling stock to raise the needed capital. Doing so would require him to give up some ownership, but this is more agreeable to him than the alternative. The big question now is, How can the company raise $3 million