33. TANAPCALCBR10 6.7.020. DETAILS MY NOTES Business Decisions Sharon, the owner of the Brentwood Motel, is planning to

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33 Tanapcalcbr10 6 7 020 Details My Notes Business Decisions Sharon The Owner Of The Brentwood Motel Is Planning To 1 (41.71 KiB) Viewed 53 times

33. TANAPCALCBR10 6.7.020. DETAILS MY NOTES Business Decisions Sharon, the owner of the Brentwood Motel, is planning to renovate all the rooms in her motel. There are two plans before her. Plan A calls for an immediate cash outlay of $400,000, whereas plan B calls for an immediate outlay of $200,000. Sharon estimates that adopting plan A would yield an income stream of f(t) = 3,070,000e0.04t dollars/year for the next 5 years, whereas adopting plan B would yield an income stream of g(t) = 3,400,000 dollars/year for the next 5 years. If the prevailing rate of interest is 5%/year compounded continuously, which plan will yield the higher net income (in dollars) at the end of 5 years? Oplan A plan B