Cost and Profit

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Introduction

The focus of my final project will be to evaluate a decision I made within an organization in an attempt to influence the amount of overall equity by choosing to purchase a product that has improvement opportunities through the use of personal funds and resources that are available from my organization in the form of labor. This decision is compared to purchasing a newer, higher value home periodically and increasing equity through market forces.

Abstract

To effectively relay my abstract I will describe the scenario by simplifying the details of the strategy. The decision is whether or not to purchase product A or B. Product A has a lesser purchase price than product B. Product B has been recently remodeled and carries a higher current equity and value. The idea is to create a greater amount of equity and value than product B through the purchase of product A and adding equity using a major resource at the disposal of the purchaser. This is done by adding on to or making improvements on product A over a period of time. The potential return on investment of upgrading to product B immediately must be less than that of the added value over time of product A.

Executive Summary

I have never been personally involved in a decision making position regarding economic decisions within my employment, but several years ago I was part of a decision whether to purchase a home and re-modeling it on my own or purchasing a home that had no significant upgrade

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opportunities. At the time the answer was clear. We chose to purchase a house because of the economic opportunities to add equity to the home over a lengthy period of time. In the end the implementation of the decision was altered by uncontrollable circumstances and I am still striving to make my first home purchase....