Some advantages: simpler, less regulation, the owners are also the managers, sometimes personal tax rates are better than corporate tax rates. Solutions Manual Fundamentals of Corporate Finance 8th edition Ross, Westerfield, and Jordan Updated 03-05-2007ĬHAPTER 1 INTRODUCTION TO CORPORATE FINANCE Answers to Concepts Review and Critical Thinking Questions 1.Ĭapital budgeting (deciding whether to expand a manufacturing plant), capital structure (deciding whether to issue new equity and use the proceeds to retire outstanding debt), and working capital management (modifying the firm’s credit collection policy with its customers).ĭisadvantages: unlimited liability, limited life, difficulty in transferring ownership, hard to raise capital funds.
