Business Investments

Jul 4th, 2016
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As the owner of a vinyl fencing company, you are making plans for two large purchases in the next 3 to 5 years to achieve your business goals. Purchase 1: You plan to expand your vinyl fence company in the future, and must purchase a new warehouse facility to achieve this goal. Your insurance company is offering you two very attractive investment options, an ordinary annuity and an annuity due, both compounding quarterly and paying 8% annual interest over a 5-year period. Your 5-year budget includes saving $2,000.00 each quarter. To evaluate which option will benefit the business most, you must evaluate both annuity options by calculating the future value of each option and explain how the investment will help you to carry out your goals. Purchase 2: After careful review of your maintenance log, you also realized that you will need to replace a fence post molding machine that sells for $40,000.00. You estimate that you will need to purchase a new machine in 3 years’

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Unit 6: Instructor Graded AssignmentBusiness InvestmentsAnnuity and Sinking FundIn the future, Im planning on increasing my vinyl fence company and I must get my aimby purchasing the facility of new warehouse. Two very attractive investment options areoffered by my insurance company, one is ordinary annuity and the other is annuity due. Overa 5-year period, both options are quarterly compound and they are paying annual interestwhich is 8%. I have 5-year budget plan and there is $2000.00 saving for each quarter.A need to replace a fence post- molding machine occurs when I realized about its benefitsand it sells for $40,000. According to my estimation after 3 years I become able to buy thismachine with only sinking fund which compounds semi-annually, and earns a 12% annualrate and I also gain saving from it.We can define Annuities as a series of fixed payments which is paid to a person, businessor an individual for the fixed period of time. Usually, the period of this expenditure is base on biannually, yearly, quarterly or on a monthly. There two basic types of annuities which are: Ordinary Annuity are the payments which are done at the end of each agreed period

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