Suppose you have to establish a new company. Suggest in which item or items company should deal. How much sale of the item is required in order to reach at break even point depending on the suggested price of item, production capacity, fixed and variable cost associated with the item? Businesses have to plan for the future. Since equipment breaks down or wears out, business owners have to have the money to replace the equipment. In addition, money might be set aside for retirement benefits for their employees. Suggest if the company need to set aside the lump sum of money that will collect interest or company should purchase annuities. Support your suggestion with argument.

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To suggest the item or items a new company should deal with, we need to consider various factors such as market demand, competition, potential profitability, and the company's resources and capabilities.

1. Market research: Conduct thorough market research to identify emerging trends, gaps in the market, and customer preferences. Assess the demand and potential growth of different industries or product categories.

2. Competitive analysis: Evaluate the competitive landscape to determine the existing players, their market share, and their strengths and weaknesses. Look for opportunities where the company can differentiate itself or offer a better value proposition.

3. Profitability analysis: Estimate the potential profitability of different items based on factors like production costs, pricing, and expected sales volumes. Consider both fixed and variable costs associated with each item.

4. Production capacity: Assess the company's production capacity and capabilities. Choose items that can be efficiently produced within the available resources to maximize efficiency and minimize costs.

5. Break-even analysis: Calculate the break-even point for each item based on the suggested price, production capacity, fixed costs, and variable costs. The break-even point is the level of sales at which total revenue equals total costs, indicating when the company will start making a profit.

To determine the break-even point, use the following formula:
Break-even point (in units) = Fixed Costs / (Price per Unit - Variable Costs per Unit)

Regarding setting aside funds for equipment replacement and employee retirement benefits, let's consider two options: lump sum savings with interest or purchasing annuities.

1. Lump sum savings with interest: By setting aside a lump sum of money that collects interest, the company can accumulate funds over time to cover future expenses such as equipment replacement or retirement benefits. The advantage of this approach is that the company has control over the funds, can manage the investment strategy, and potentially maximize returns. However, it requires expertise in financial management and carries the risk of fluctuations in interest rates or investment performance.

2. Purchasing annuities: Annuities are financial products where a lump sum is invested with an insurance company, which then pays out a regular income stream over a specified period. The advantage of annuities is that they provide a guaranteed income, ensuring that funds are available for retirement benefits or other expenses. However, annuities may come with fees, limited investment options, and potential limitations in flexibility.

The choice between lump sum savings with interest or purchasing annuities depends on the company's financial goals, risk tolerance, and expertise in investment management. Consider consulting with a financial advisor who can assess the company's specific circumstances and provide tailored recommendations.