Mr. Patrick Brennan

As Mr. Patrick Brennan is a precise young business person and having better aspirations, it is not better for him to hold up his establishment under the Proprietorship structure. Considering the growth shown in his business graph, I advice Mr. Brennan to get your organization incorporated as soon as possible.I hereby point out three general advantages that the corporate structure has everywhere the proprietorship structure. (a) First of all, when a firm is incorporated it becomes a unmistakable legal entity. Its life commences from the date of incorporation. It enjoys all the legal privileges laid prevail over by the respective countries.(b) Secondly, it acquires a perpetual succession. The members may come and go, just now it goes on for ever, unless it is wound up. (c) Its property is not the property of the shareholders. The shareholders have a right to share in the profits of the comp each when realized and divided. Likewise, any liability of the company is not the liabili ty of the individual shareholders. (2) A attribute feature of corporate enterprise is the separation between ownership and heed as a corollary of which the latter enjoys substantial autonomy in count on to the affairs of the firm.In the corporate structure shareholders are the owners of the enterprise and the counselling is the operator of the owners. The shareholders delegate the decision making authority to professional management on the premise that the latter will work in the interest of the former. In order to ensure that management would take optimal decisions compatible with the shareholders interests of respect maximization, of course, they have to be paid incentives. Certainly, in that respect may also filch bureau problems in terms of conflicts of interests. Policies to mitigate the agency problems do, of course, involve cost.However, this is the cost that the owners have to pay to harmonize the conflicting goals between them and the management of the enterprise. But, there is no need of worry Mr. Brennan because in order to minimize the agency problems and agency cost, you can arrange certain provision for appropriate incentives and for monitor of agents. By auditing the financial statements and limiting decision making by the management you can easily monitor the agents and thereby reduce the agency costs. sever B (1) COMPUTATION OF WEIGHTED AVERAGE COST OF CAPITAL