You have opened your own word-processing service. You bought a personal computer, and paid $5,000 for it. However, due to the cost changes in the computer industry, the current price of an equivalent machine is $2,500. You could sell any used machine for $1,000. If you were not word processing, you could earn $20,000 per year at an alternative job. Assume that the interest rate is 10%. You can also hire an assistant who can do everything that you can do for $20,000 per year (you would still continue to do word processing).

One person using one computer can produce 11,000 typed pages per year, and the price per page for your service is $2.
You are considering three options: (1) expand your business by hiring an assistant. (2) leave your business the way it is (3) shut down. Based on the costs and revenues above, which should you do? Explain and show any relevant calculations.

To determine which option you should choose, we need to compare the costs and revenues associated with each option. Let's break down the calculations for each option:

1) Expand your business by hiring an assistant:
Costs:
- Additional annual cost for hiring an assistant: $20,000

Revenues:
- Number of pages one person can type per year: 11,000
- Price per page for your service: $2
- Total revenue generated by one person: 11,000 * $2 = $22,000
- Revenue generated by both you and the assistant: $22,000 * 2 = $44,000

Net Revenue = Total Revenue - Costs = $44,000 - $20,000 = $24,000

2) Leave your business as it is:
Costs:
- No additional costs

Revenues:
- Revenue generated by one person: $22,000

Net Revenue = Total Revenue - Costs = $22,000 - $0 = $22,000

3) Shut down:
Costs:
- No additional costs, but you lose the opportunity cost of your alternative job, which is $20,000 per year

Revenues:
- No revenues, as you would be shutting down the business

Net Revenue = Total Revenue - Costs = $0 - $20,000 = -$20,000

To determine which option to choose, we need to compare the net revenues of each option.

Net Revenue for option 1: $24,000
Net Revenue for option 2: $22,000
Net Revenue for option 3: -$20,000

Based on these calculations, you should choose option 1: expand your business by hiring an assistant. This option generates the highest net revenue of $24,000.