question archive A 62-year-old couple is considering opening a business of their own

A 62-year-old couple is considering opening a business of their own

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A 62-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) = 35,000    (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) = 20,100e0.08t    (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 3 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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