Which of the following is an advantage of starting a new business as a partnership?
A) Business profits are not taxed.
B) A partnership has few government rules and regulations to comply with.
C) The owners have limited personal liability.
D) A partnership can easily attain additional funding.
B
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The Nash equilibrium of this game is for Jet Cruises to ________ and Easy Sail to ________.
Jet Cruises wants to prevent Easy Sail from entering the sailboat market. The above game tree illustrates the different strategies and corresponding payoffs for the two firms. Both Jet Cruises and Easy Sail have the same strategies of advertising (Ad) or not advertising (No Ad). The payoffs represent net profit in millions.
A) Ad; Ad
B) No Ad; Ad
C) Ad; No Ad
D) No Ad; No Ad
Suppose the interest rate is 6 percent, the expected growth rate of the firm is 3 percent, and the firm is expected to continue forever. If current profits are $1,200, what is the value of the firm?
A. $42,400 B. $40,000 C. $36,500 D. $41,200