FIN 512 WEEK 2 answer key
FI 512 Week 2 Answer Key
Chapter 3
1. [Business Organization and Intellectual Property] Phil Young, founder of the Pedal Pushers Company, has developed several prototypes of a pedal replacement for children’s bicycles. The Pedal Pusher will replace existing bicycle pedals with an easy release stirrup to help smaller children hold their feet on the pedals. The Pedal Pusher will glow in the dark and will provide a musical sound as the bicycle is pedaled. Phil plans to purchase materials for making the product from others, assemble the products at the venture’s facilities, and hire product sales representatives to sell the Pedal Pushers through local retail and discount stores that sell children bicycles. Phil will need to purchase plastic pedals and extensions, bolts, washers and nuts, reflective material, and a “micro-chip” to provide the “music” when the bicycle is pedaled.
A. How should Phil organize his new venture? In developing your answer consider such factors as amount of equity capital needed, business liability, and taxation of the venture.
Phil’s proposed business is not likely to be very capital intensive. That is, little investment will be required for equipment and a production facility. The investment in inventories can probably be kept relatively low. Thus, organizing as a proprietorship will probably work due to a need for relatively low amounts of equity capital. Being taxed as a proprietorship also may be advantageous. Of course, the major advantage to Phil by choosing to organize as a corporation is to limit his liability to his business investment. If Phil has substantial personal assets, organizing as a corporation would help protect these assets in the event the business fails.
B. Phil is concerned about trying to protect the intellectual property embedded in his Pedal Pusher product idea and prototype. How might Phil consider protecting his intellectual property?
Possible ways to protect his
Chapter 3
1. [Business Organization and Intellectual Property] Phil Young, founder of the Pedal Pushers Company, has developed several prototypes of a pedal replacement for children’s bicycles. The Pedal Pusher will replace existing bicycle pedals with an easy release stirrup to help smaller children hold their feet on the pedals. The Pedal Pusher will glow in the dark and will provide a musical sound as the bicycle is pedaled. Phil plans to purchase materials for making the product from others, assemble the products at the venture’s facilities, and hire product sales representatives to sell the Pedal Pushers through local retail and discount stores that sell children bicycles. Phil will need to purchase plastic pedals and extensions, bolts, washers and nuts, reflective material, and a “micro-chip” to provide the “music” when the bicycle is pedaled.
A. How should Phil organize his new venture? In developing your answer consider such factors as amount of equity capital needed, business liability, and taxation of the venture.
Phil’s proposed business is not likely to be very capital intensive. That is, little investment will be required for equipment and a production facility. The investment in inventories can probably be kept relatively low. Thus, organizing as a proprietorship will probably work due to a need for relatively low amounts of equity capital. Being taxed as a proprietorship also may be advantageous. Of course, the major advantage to Phil by choosing to organize as a corporation is to limit his liability to his business investment. If Phil has substantial personal assets, organizing as a corporation would help protect these assets in the event the business fails.
B. Phil is concerned about trying to protect the intellectual property embedded in his Pedal Pusher product idea and prototype. How might Phil consider protecting his intellectual property?
Possible ways to protect his