Jowel Smithers and Sonda Richards merged all oftheir

Chapter 3, Problem 3.64

(choose chapter or problem)

Jowel Smithers and Sonda Richards merged all oftheir financial resources and opened a mobilephone sales and repair business in the upscale DomainMall in Los Angeles 10 years ago with aninitial investment of $2.5 million. As revenues increasedsignificantly over the first 4 years, theytook out salaries that totaled $500,000 each yearfor the two of them. With increased success, theydecided to pay themselves a total of $1.7 millioneach year from years 5 through 10. They hoped atthe initiation of the joint business venture to make10% per year on the investment in terms of salaries.(a) Determine the equivalent future worth after10 years of the salaries. (b) If they had been satisfied with a $5 millionfuture worth, calculate the size that the initialinvestment could have been instead of the$2.5 million, provided they had the fundsavailable.