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Case Solutions
Fundamentals of Corporate Finance
Ross, Westerfield, and Jordan
11th edition
Updated: 01/17/2015
Prepared by
Brad Jordan
University of Kentucky
Joe Smolira
Belmont University
CHAPTER 1
THE McGEE CAKE COMPANY
1. The advantages to an LLC are: (a) Reduction of personal liability. A sole proprietor has unlimited
liability, which can include the potential loss of all personal assets. (b) Taxes. Forming an LLC may
3. As a small company, changing to a LLC is probably the most advantageous decision at the current
time. If the company grows, and Doc and Lyn are willing to sell more equity ownership, the
