1 page Essay Assignment on business investment Annuities and Sinking Funds

Below is a breif discription of the the purchase senarios. Attached are detailed instruction on the assignment writing format.

Write an essay discussing how you, as a business owner, can use annuities to achieve business goals. Financial decisions require careful planning and prioritizing, especially when large, capital-intensive purchases are involved. As you establish a process to achieve your company goals, you will need to demonstrate your math skills, consider different investment options, and describe how different investment vehicles can be used effectively to accomplish business goals.

Scenario:

As the owner of a vinyl fencing company, you are making plans for two large purchases in the next 3 to 5 years.

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 bank 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 realize 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’ time, as the existing machine will reach the end of its useful life in that time. You plan to save for this purchase using a sinking fund that compounds semi-annually, and earns a 12% annual rate.