Answer:
Three cases are considered: First case is to construct a small factory, second is to construct a large factory and third is to do nothing.
Construct a Small Facility is the most suitable option from the business perspective which makes case 1 recommended.
Explanation:
Case 1 - Construct a small facility
Return = [P(High Demand) x Revenue in case of High Demand] + [P(Low Demand) x Revenue in case of Low Demand] - Cost of Setup
= [ 0.4 x 12 ] + [ 0.6 x 10 ] - 6 = $ 4.8 million
Case 2 - Construct a Large Facility
Return = [P(High Demand) x Revenue in case of High Demand] + [P(Low Demand) x Revenue in case of Low Demand] - Cost of Setup
= [0.4 x 14] + [0.6 x 10] - 9 = $ 2.6 million
Case 3 - Do Nothing
Return = 0
Explanation:
The categorizations are shown below:
Accumulated depreciation = A and BS
Long-term debt = L and BS
Equipment = A and BS
Loss on sale of short-term investments = LS and IS
Net income = R and IS
Merchandise Inventory = A and BS
Other accrued liabilities = L and BS
Dividends paid = OE and BS
Cost of goods sold = E and IS
Additional paid-in capital = OE and BS
Interest income = R and IS
Selling Expense = E and IS
Answer:
If a person wants to start a business but the limit the amount of liability he is responsible, Option D, Corporation would be most appropriate.
Explanation:
In corporation or a limited liability corporation, one doesn’t need to liquidate his/her personal assets to cover the debt in case the business goes bankrupt. A corporation is a company or group of people that can act legally as a person or single entity. Because of this, the owners of the corporation have limited amount of legal liability for the corporation's business activities and debts.
In sole proprietorship, person who owns the business is responsible for his debts and has unlimited liability. Similarly, in partnership and joint venture also, person is liable for the debts. So, out of the given options, Option D is the correct answer if person wants to limit his liability.
Joint venture is when two companies ask to do part or full of their job.
