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Sara Alicia Ortega Ricarte, Business Organization, Value of the Firm,…
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Business Organization
Corporation
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Advantages
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Easier for corporations than for proprietorships and partnerships to raise money in the financial markets
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Value of the Firm
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Value = current p(present) value of expected cash flows (CF) based on the return demanded by investors (r)
Agency Relations
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owner/principal hires an agent and delegates decision-making authority to that agent to act on behalf of the principal
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Structure of the Firm
Board of Directors
President, Chief Executive Officer (CEO)
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Vice President: Operattions (Chief Operating Officer), COO
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