ESB review 2

Which 2 should be included when calculating start up cost for a business?

• Rent and utilities

• Business cards and permits, licenses, and incorporation fees

• payroll and rent

• utilities and business cards

What are 2 benefits of equity funding?

• can be used to raise working capital and loan payments are predictable

• investors do not get paid if the business doesn't make a profit and have no say in the management of the business

• Loan payments can be setup so they match seasonal sales and investors have no say in the management of the business

• Can be used to raise working capital and investors do not get paid if the business does not make a profit

Which 2 are benefits of using Angel investors to help start a business?

• Payback of the loan is predictable and angels often accept a lower return on investment

• Angels often accept a lower return on investment and typically do not expect to be paid until the business starts making money

• Angels have no say in the management of the business and no need for collateral

• Payback of the loan is predictable and no need for collateral

Equity financing requires a business owners to give up control of the business to obtain funding

• True

• False

Bootstrapping requires the owner of the company to provide all the funding

• True

• False

Lenders do not require owners to identify the purpose of the loan

• True

• False

The business owner's personal credit score does not affect their ability to qualify for a loan

• True

• False

A law was passed increasing the minimum wage by 30%. What is the minimum amount the owner of a small business must now charge customers for labor to balance increased operational expenses?

• 60%

• 30%

• No increase is needed

• 15%

The formula to determine equity is Assets - Liabilities = Equity

• True

• False

You operate a small insurance office with a partner. Which expense is a fixed cost?

• Paycheck for an hourly administrative assistant

• water bill for an office

• property lease for the office

• cost of paper supplies