FIN 419 Week 1 DQ's - 7632

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What is a limited liability corporation?

What is a limited liability partnership?

What are the differences?

What are the advantages and disadvantages of each?

What is a sensitivity analysis?

What is a scenario analysis?

How would you apply each one to a potential investment opportunity?

How would you use the information from this analysis? Explain.

Solution Description

A limited liability corporation (LLC) limits the personal liability of the owners for debts and actions of the LLC. “…the LLC gives its owners, like those of S corps, limited liability and taxation as a partnership” (Gitman, 2006, p. 8).

A limited liability partnership (LLP) provides limited liability to individual partners from certain partnership obligations. “All LLP partners have limited liability. They are liable for their own acts of malpractice, but not for those of other partners”. (Gitman, 2006, p. 8).

An LLC, unlike an S corp, can own more than 80% of another corporation, and corporations, partnerships, or non-U.S. residents can own LLC shares. The LLP is taxed as a partnership. What they have in common is that their owners en