Page 170 - Business Principles and Management

C HAPTER 6 A SSESSMENT

APPLY WHAT YOU KNOW

20. Explain why the five basic rights of stockholders are necessary in
corporate forms of organizations.

21. Explain why a corporation can be viewed as an artificial person.
22. Compare the financial responsibility of owners of a corporation
with that of owners of a partnership.
23. Explain how a joint venture could be valuable in a situation in
which Corporation A has expertise in one area and Corporation
B has expertise in another.

24. Discuss whether the Girl Scouts organization meets the qualifica-
tions for operating as a nonprofit corporation in light of the fact
that it sells a large volume of cookies each year.

MAKE CONNECTIONS

25. Math The board of directors of Melby Company, Inc., decided to
distribute $40,950 as dividends to shareholders who hold 27,300
shares of stock. What is the amount of the dividend to be distrib-
uted on each share? John Taylor owns 240 shares. What amount
will he receive in dividends?
26. Research Alone or in teams (as specified by your instructor), search
the library or the Web to gather information about the basic fea-
tures of a cooperative. Then report to your class on how coopera-
tives differ from typical corporations in the way they operate and
how investors share in the benefits. In particular, go to the USDA
Rural Development site and find the publication “Co-ops 101” for
additional information.

27. Technology George Fernandez purchased stock in the Elite Manufac-
turing Co., Inc., for $76 a share. Last year he received quarterly
dividends of $1, $1, $1, and $0.80 on each share. Use spreadsheet
software to answer the following questions.
a. What were his total dividends for the year as a percentage of the
price he paid for each share?
b. Assume the stock price increases to $100, but the company pays
the same dividend. Determine the new percentage return for the
year.
28. Speaking Assume you are in a partnership. Prepare a speech that you
will give to your partners to justify changing to a corporate form of
ownership. Choose a specific corporate form and link it to your com-
pany goals. Justify your choice by addressing its advantages and dis-
advantages for your company.

157