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At the beginning of 2019, Nanosoft came out with a new operating system, OS Windows, which brought in a constant continuous income stream of $5
At the beginning of 2019, Nanosoft came out with a new operating system, OS Windows, which brought in a constant continuous income stream of $5 million dollars per year. Six months later, they released a security update known as "OS SneezeGuards", which was met with harsh negative reviews. Their income stream decreased as a result: if t is the time since the beginning of 2019, when t > 0.5, sales of the OS only generated 5e2(t0.5) million dollars per year. The company stopped selling the OS at the end of 2019. Nanosoft earns interest at a rate of 4% on their income, compounded continuouslyIf Nanosoft had sold the rights to all sales of the OS at the beginning of 2019, what would have been a fair price? In other words, what was the present value of this income stream at this time? As of the beginning of 2019, the present value of the income stream was about 4.01 million dollars. (Round to the nearest 0.01 million
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