Lisa Is Considering Investing $25,000 in a Limited Partnership Which

question 139

Essay

Lisa is considering investing $25,000 in a limited partnership which is raising additional capital.According to the prospectus,for the past 10-year period the average earnings have been 15% and for the past 5-year period the average earnings have been 8%.Lisa is in the 33% tax bracket.
a. List some factors Lisa should consider in making a decision on the potential investment.
b. Assuming the partnership finances its activities with equity rather than debt, what is the maximum cash flow benefit Lisa can receive if the partnership generates losses?

---

Definitions:

Immediate Gratification

The desire to experience pleasure or fulfillment without delay or deferment.

Basic Drives

Fundamental biological impulses that drive behavior, such as hunger, thirst, and the need for sleep.

Id

In psychoanalytic theory, the part of the psyche that is the source of instinctive impulses and demands for immediate satisfaction of primal needs.

Ego

In psychoanalytic theory, the part of the personality that mediates between the demands of the id, superego, and reality.