|
Sinking
Fund vs. Borrowing vs. Insurance
| Number
of Years to Associate's Death |
If
you borrow the money or use an Installment Buyout (10% interest)* |
If
you pay cash** From Sinking Fund |
If
you use Permanent Life Insurance (Approximations) |
| 1 |
$
1.10 |
$
1.00 |
2
cents |
| 2 |
$
1.10 |
$
1.00 |
4
cents |
| 3 |
$
1.10 |
$
1.00 |
6
cents |
| 4 |
$
1.10 |
$
1.00 |
8
cents |
| 5 |
$
1.10 |
$
1.00 |
10
cents |
| 6 |
$
1.10 |
$
1.00 |
12
cents |
| 7 |
$
1.10 |
$
1.00 |
14
cents |
| 8 |
$
1.10 |
$
1.00 |
16
cents |
| 9 |
$
1.10 |
$
1.00 |
18
cents |
| 10 |
$
1.10 |
$
1.00 |
20cents |
| 15 |
$
1.10 |
$
1.00 |
30
cents |
| 20 |
$
1.10 |
$
1.00 |
40
cents |
HOW
DO YOU PROPOSE TO BUY OUT YOUR BUSINESS ASSOCIATE?
|
*
Assumes the loan is repaid in one year. Amount would be greater with
longer repayment period. Interest rates will vary of course; 10% is used
only as an example.
**
This assumes the availability of cash when it is needed.
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