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Social Science
Business
Business Plan
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Terms in this set (13)
Quick Summary
This is a brief verbal synopsis lasting no more than thirty seconds to three minutes. It's used to interest potential investors, customers, or strategic partners.
Oral Presentation
This is a relatively short, colorful, and entertaining slide show with a running narrative meant to interest potential investors in reading the detailed business plan.
Operational Business Plan
This "operational plan" is meant for use within the business only. This plan describes in greater detail than the investor's business plan how the company will meet its goals.
Investor's Business Plan*
A detailed business plan is well written and formatted so that anyone who is thinking about investing in your start-up business will know exactly what you are planning.
Capital
How will you locate the initial money your business will need? What will be your costs and what kind of profit can you expect?
Customer
Who will be buying your product or service and why?
Concept
What is your product or service and how is it different from similar products or services?
Business Idea
Explain the product or service, type of business, and type of business ownership.
Opportunity and Market Analysis
Describe the primary market, its size, its trends and characteristics, and its growth rate.
Organizational Structure
Discuss the organizational structure of the business and provide ownership information.
Legal Structures
Discuss issues related to intellectual property, contracts, insurance, taxes, and regulations.
Business Management
Describe how the business will be managed (production, distribution, operations, etc.)
Plan for Growth
Explain your plans to grow the business.
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Verified questions
QUESTION
Empire Electric Company (EEC) uses only debt and common equity. It can borrow unlimited amounts at an interest rate of $r_{d}=9 \%$ structure, which calls for 35% debt and 65% common equity. Its last dividend $\left(D_{0}\right)$ was $2.20, its expected constant growth rate is 6%, and its common stock sells for$26. EEC’s tax rate is 40%. Two projects are available: Project A has a rate of return of 12%, and Project B’s return is 11%. These two projects are equally risky and about as risky as the firm’s existing assets. a. What is its cost of common equity? b. What is the WACC? c. Which projects should Empire accept?
QUESTION
Discuss the following statement: All else equal, firms with relatively stable sales are able to carry relatively high debt ratios. Is the statement true or false? Why?
QUESTION
Why is EBIT generally considered independent of financial leverage? Why might EBIT actually be affected by financial leverage at high debt levels?
QUESTION
Suppose Chance Chemical Company’s management conducted a study and concluded that if it expands its consumer products division (which is less risky than its primary business, industrial chemicals), its beta will decline from 1.2 to 0.9. However, consumer products have a somewhat lower profit margin, and this would cause its constant growth rate in earnings and dividends to fall from 6% to 4%. The following also apply: $\mathrm{r}_{\mathrm{M}}=9 \%, \mathrm{r}_{\mathrm{RF}}=6 \%$, and $\mathrm{D}_{0}=\$ 2.00$. a. Should management expand the consumer products division? Explain. b. Assume all the facts given except the change in the beta coefficient. How low would the beta have to fall to cause the expansion to be a good one?
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