Stable Money Makers - Alpaca Business
Betty Parks, a 49 year old building code auditor, became frustrated as she watched her retirement investment in a 401K move in the wrong direction. Specifically, Betty lost approximately 50% of her investment in the 401K, she had planned to use for retirement. After three years of research, Betty decided to make an unconventional investment of $56,000 in tangible assets, the Alpacas. Fortunately for her, she had two new alpaca babies at the end of the first year. The market value of one show alpaca is averaged at $15,000. That equates to almost 26.79% return on her initial investment within one year. The alpaca market is stable, demand is high, and Betty has the assets to continue growth in the breeding business. Team B believes that Betty should make a capital improvement in purchasing ...view middle of the document...
With the additional alpacas come additional breeding and baby alpacas. If each female produces one baby a year, that would be an increase of $30,000 in revenue and a 50% ROI in just the 1st year. The normal gestation period is 11.5 month which means each female can produce one baby a year and most are re-mated 2-6 weeks after giving birth (Northwest Alpacas, 2014). In year two Betty could pay back her entire additional investment and by year three making money.
The market for alpacas has been moderated by the effects of relatively slow herd growth (Suglarloaf Alppaca Company, 4/30). Alpacas breeding are an excellent way to accumulate tax-deferred wealth because breeding is relatively trouble free. Alpacas have a long trouble free reproductive life span of 25-28 years. As an active breeder, the income derived from the sale of assets will be taxed at a lower level. Any expenses incurred such as veterinary care, feed bills and other expenses associated with raising and marketing alpacas are also tax deductible (The Bottom Line, 4/30) .
It is vital for Betty Parks to keep breeding alpacas in order for her retirement to keep increasing. Her retirement depends on breeding these alpacas and selling them. Therefore, the capital improvement in show-quality breeders will produce enough alpacas for her to market and her profits will far exceed her expenses. This lucrative business will sustain a positive retirement future. Betty should start this investment with confidence of continued wealth and growth for her retirement plan.
Northwest Alpacas. (2014). Alpacas Q&A. Retrieved from http://www.alpacas.com/QnA/Breeding.aspx
Suglarloaf Alppaca Company, 4/30. Suglarloaf Alppaca Company. (4/30/2014). Retrieved from http://www.suglarloafpacas.com/financial.shtml
The Bottom Line. (4/30/2014). Retrieved from http://www.alpacafarms.com/TheBottomLine.htm