John, Samuel, and Jim Are General Partners in the Development

question 15

Multiple Choice

John, Samuel, and Jim are general partners in the development of an electric car. Jim pours all his money into the project, but it never seems to work out. Eventually the partnership and Jim cannot meet their daily obligations, and the partnership is dissolved. Jim files for bankruptcy. If the partnership assets are insufficient to pay all claims against the partnership:

• A) the trustee in bankruptcy must seek recovery of the deficiency first from John and Samuel.
• B) Jim is released from liability because of the bankruptcy proceedings.
• C) Jim's personal assets are not available for the partnership debts because he has limited liability.
• D) the bankruptcy court must follow the doctrine of marshaling of assets.

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Definitions:

Internal Rate

Often refers to the internal rate of return (IRR), which is a discount rate that makes the net present value (NPV) of all cash flows from a particular project equal to zero.

Net Present Value

A financial metric used to evaluate the profitability of an investment, accounting for its time value of money.

Capital Budgeting

The process of planning significant investments in projects that have long-term implications such as the purchase of new equipment or the introduction of a new product.

Screening Tool

A method or instrument used to assess or evaluate certain characteristics in individuals or scenarios, often used in healthcare, employment, and research.