Question
A 59-year-old couple is considering opening a business of their own. They will either purchase an established Gift and Card Shoppe or open a new
A 59-year-old couple is considering opening a business of their own. They will either purchase an established Gift and Card Shoppe or open a new Wine Boutique. The Gift Shoppe has a continuous income stream with an annual rate of flow at time t given by
G(t) = 31,900 (dollars per year).
The Wine Boutique has a continuous income stream with a projected annual rate of flow at time t given by
W(t) = 19,900e0.08t (dollars per year).
The initial investment is the same for both businesses, and money is worth 10% compounded continuously. Find the present value of each business over the next 6 years (until the couple reaches age 65) to see which is the better buy. (Round your answers to the nearest dollar.)
Gift Shoppe | $ | |
Wine Boutique | $ |
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