Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

A business is planningto purchase a piece of equipment that will produce a continuous stream of income for 7 years with rate of flow f

A business is planningto purchase a piece of equipment that will produce a continuous stream of income for 7 years with rate of flow f(t)=13600. Assume the continuous income stream earns 6.9%, compounded continuously.
A. Find the future value of f(t) after 7 years and interpret the result.
The future value of the investment after years is $
(Round your final answer to 4 significant figures. For example, an answer like $1,244,252.02 would become $1,244,000.00.)
B. Find the present value of the continuous income streart. That is, what single deposit into an account earning the same interest rate will produce the same future value as the continous income stream?
In order to match the $ q, that will be earned by the continous income stream over years, you would need a present value (a single deposit) of $
(Round your final answer to 4 significant figures. For example, an answer like $1,244,252.02 would become $1,244,000.00.)
image text in transcribed

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Institutions And Markets

Authors: Jeff Madura

10th International Edition

0538482176, 9780538482172

More Books

Students also viewed these Finance questions

Question

Write an essay on The perspective of Magda in The Shawl

Answered: 1 week ago