Capital Improvements with Alpaca Growth
FIN 571
8/31/2015
Professor

Capital Improvements with Alpaca Growth
Capital improvements and capital growth are important to the success of any organization. To be able to generate profits and revenue, organizations need to seek out capital improvements that will increase the overall growth. Capital improvements include the “addition of a permanent structural improvement or the restoration of some aspect of a property that will either enhance the property's overall value or increases its useful life” (Wikipedia, 2015).
In the corporate finance video, “Stable Money Makers”, Peggy Parks did some research after her retirement portfolio lost a substantial amount of money and was not going to sustain her in retirement. She researched alpacas and invested in an alpaca farm. She was profitable the first year; however, there are ways that she can continue to grow the organization by making capital improvements that will continue to increase her success and retirement wealth.
Recommendations for Capital Growth
Peggy Parks' $56,000 investment in seven alpacas has provided a $15,000 return in the first year as a result of the animals' breeding, which resulted in two additional alpaca offspring. Additionally, due to recent tax changes the law provides increased benefits to alpaca farms. Capital improvements to active hands-on breeder's ranch can be written off against income. Therefore, the business opportunities listed below are recommended for continued growth and success in her alpaca business.
First, the recommendation is to continuing growing the herd as large as her available resources permit. Taking this approach will allow Peggy to continue receiving the basic return on investment that she received in the first year and given the increasing herd size this population growth should be exponential during the first