By: Team 2 Evan Adamson & Brian Bathke

The Scenario  Engineer with 10 years of experience and $100,000 has 2 options. a) Become a consultant for small time engineering firms. (Finds work 35% of the time for $150 dollars/hr) b) Open up a vehicle repair shop in the local mall for motorcycles, go-karts, dirt bikes, bicycles, etc. (Will be sold in 20 years)

Assumptions for Consultant Job  Length = 20 years  Work = 35%  hours/week = 40  Weeks/year = 18.2  $/hr = $150  yearly income = $109,200  Inflation Rate = 3%  Income Tax = 30%

Assumptions for Repair Shop  Total rent per year = $48,000  Tools = $15,000  Customers a Day = 5  Open Days a week = 6  Open weeks a year = 50  Total customers = 1500  Avg. price per customer = $65  Income = $97,500  Inflation = 3%  Tax = 35%  Total Company Cost = $45,000

Comparison of Net Income over 20 Year Period  Consultant Job  Income=$2,934,245  Cost=$2,707,459  Net Earning=$226,786  Plus Initial 5% 9% rate=$560,000  Total is $787,227  Repair Shop  Income=$9,637,875  Cost=$8,932,517  Salvage is 5 times final years earnings  Salvage= $676,606  Total w/ Salvage= $1,381,964  Total w/o Salvage=$705,358

Economic Analysis  Consultant Job  With 9% rate on Initial $100,000 PV(3%,20yrs,$787227) Present value of the Consultant Job is equal to $435,868.  With 5% rate on Initial $100,000 PV(3%,20yrs,$492116) Present value of the Consultant Job is equal to $272,473  Repair Shop  With Salvage Value PV(3%,20yrs,$ ) Present value of the Repair Shop is equal to $765,160.  Without Salvage Value PV(3%,20yrs,$705358) PV= $390,539

Yearly Income Over Work Life For Consultant JobFor Repair Shop

Sensitivity Analysis-Yearly Cost For Consultant JobFor Repair Shop

Income Broken Down  Hours over 20 year period = 14,560  Total Income/Total Hours $54 per Hr.  Hours over 20 year period = 48,000  Total Income/Total Hours $29 per Hr.

Conclusion  In conclusion the Repair shop produces more wealth but at a much higher risk.  Consultant Job along with well invested initial $100,000 produces a comfortable life.  Our choice is Consultant Job because of less hectic work schedule.