Answered step by step
Verified Expert Solution
Question
1 Approved Answer
1) 2) 1 point) This problem is similar to one in your textbook, Suppose that a company needs new equipment, and that the machinery in
1) 2) 1 point) This problem is similar to one in your textbook, Suppose that a company needs new equipment, and that the machinery in question earns the company revenue at a continuous rate of 540004 + 42000 dollars per year during the first six months of operation, and at the continuous rate of $69000 per year after the first six months. The cost of the machine is 5175000. The Interest rate is 7.25% per year, compounded continuously. a) Find the present value of the revenue earned by the machine during the first year of operation. Round your answer to the nearest cont Value: $ HI D) Determine how long it will take for the machine to pay for itself, that is, how long until the present value of the revenue is equal to the cost of the machine. Round your answer to the nearest hundredth. Years: You can view a streaming video of the solution of a version of this problem at M119Tube solution (1 point) Your rich uncle bequests to you a continuous, constant Income stream of $4000 per year for the next 25 years. The terms of the bequest require that this income stream be paid continuously into a specific savings account that will not be available to you for 25 years. This account earns 4% Interest, compounded continuously What is the present value of the bequest? How much money would the bequest be worth (including all interest accrued) after 25 years? You discover that a bank is offering 4.5% interest compounded continuously on a certificate of deposit (CD) that matures in 25 years. What is the cost of a CD at the above interest rate that would provide the same amount of money as the bequest after 25 years? You ask the executor of the estate to buy a CD now whose value after 25 years will be the same as the amount that would be available to you in 25 years under the origional terms of the bequest, and to pay you the difference between the present value of the original equest and the amount invested in the Co. 111 How much do you get now? 1 point) This problem is similar to one in your textbook, Suppose that a company needs new equipment, and that the machinery in question earns the company revenue at a continuous rate of 540004 + 42000 dollars per year during the first six months of operation, and at the continuous rate of $69000 per year after the first six months. The cost of the machine is 5175000. The Interest rate is 7.25% per year, compounded continuously. a) Find the present value of the revenue earned by the machine during the first year of operation. Round your answer to the nearest cont Value: $ HI D) Determine how long it will take for the machine to pay for itself, that is, how long until the present value of the revenue is equal to the cost of the machine. Round your answer to the nearest hundredth. Years: You can view a streaming video of the solution of a version of this problem at M119Tube solution (1 point) Your rich uncle bequests to you a continuous, constant Income stream of $4000 per year for the next 25 years. The terms of the bequest require that this income stream be paid continuously into a specific savings account that will not be available to you for 25 years. This account earns 4% Interest, compounded continuously What is the present value of the bequest? How much money would the bequest be worth (including all interest accrued) after 25 years? You discover that a bank is offering 4.5% interest compounded continuously on a certificate of deposit (CD) that matures in 25 years. What is the cost of a CD at the above interest rate that would provide the same amount of money as the bequest after 25 years? You ask the executor of the estate to buy a CD now whose value after 25 years will be the same as the amount that would be available to you in 25 years under the origional terms of the bequest, and to pay you the difference between the present value of the original equest and the amount invested in the Co. 111 How much do you get now
2)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started