Jackie, a sole proprietor, needs to raise $200,000 to expand her operations. Under which of the following financing arrangements is she likely to obtain more perquisites such as a lavish expense account?Multiple choice question.Jackie sells off her assets to raise $200,000.Jackie uses her personal inheritance to raise the $200,000.Jackie borrows $200,000 and retains full ownership.Jackie brings in an additional partner and reduces her ownership share.
Question
Jackie, a sole proprietor, needs to raise 200,000.Jackie uses her personal inheritance to raise the 200,000 and retains full ownership.Jackie brings in an additional partner and reduces her ownership share.
Solution
The answer is: Jackie brings in an additional partner and reduces her ownership share.
Here's why:
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Jackie sells off her assets to raise $200,000: This option does not provide any perquisites. She is simply converting her assets into cash.
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Jackie uses her personal inheritance to raise the $200,000: This option also does not provide any perquisites. She is using her own money to fund the expansion.
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Jackie borrows $200,000 and retains full ownership: While this option allows her to retain full ownership, it does not provide any perquisites. She is simply borrowing money and will have to pay it back.
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Jackie brings in an additional partner and reduces her ownership share: This option is likely to provide more perquisites such as a lavish expense account. By bringing in a partner, she may be able to negotiate additional benefits for herself. The partner may also bring in additional resources and expertise, which could help the business grow.
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