Jowel Smithers and Sonda Richards merged all of their financial resources and opened a mobile phone sales and repair business in the upscale Domain Mall in Los Angeles 10 years ago with an initial investment of $2.5 million. As revenues increased significantly over the first 4 years, they took out salaries that totaled $500,000 each year for the two of them. With increased success, they decided to pay themselves a total of $1.7 million each year from years 5 through 10. They hoped at the initiation of the joint business venture to make 10% per year on the investment in terms of salaries.
(a) Determine the equivalent future worth after 10 years of the salaries.
(b) If they had been satisfied with a $5 million future worth, calculate the size that the initial investment could have been instead of the $2.5 million, provided they had the funds available.
(a) Worth today = $10,732,345
(b) If net worth is $5 million after 10 years, initial investment would have had to increase from $2.5 million to $4.712 million.
 ANSWER.png)
(a) Worth today
(b) Initial investment using Goal Seek tool
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