Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

hi Is there anyone can help me with these two question? stion2 Notation: The time index I rnns'omtto T. ||| a) Suppose an investment produces

image text in transcribed

hi Is there anyone can help me with these two question?

image text in transcribed
stion2 Notation: The time index I rnns'omtto T. |||" a) Suppose an investment produces a continuous stream of income over 10 years at a rate of $20100 per year and the interest rate is 6% per year, continuously compounded Determine the present value. b) Determinetherateofincreaseinthevalue ofthe inveshnentprojectifitslifeisextendedby aninstanLdedT. e) What is the present value in question (a) if the stream of income lasts forever?I stion 3 Consider an oil eld that produces a diminishing cash ow that falls at the rate 5 as the eld is exploited CG} 2 from) With a time horizon of Tyear; the eld's present value is: T T Pa}; = J'e\"C(:)dr= Jedir'r'ccnm l] I] r is the interest rate. a) Calculate the oil eld's present value for 0(0) = 5 mommies, r = (112, s = (105, and T: 20 years- b) Calculate the rate of change in the eld's present value, dedT, if it is operated ir an instant beyond time T

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered 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

Physics

Authors: Alan Giambattista, Betty Richardson, Robert Richardson

2nd edition

77339681, 978-0077339685

Students also viewed these Finance questions

Question

What are the issues for managers of content management?

Answered: 1 week ago

Question

Explain the benefits of visualization. Critical T hinking

Answered: 1 week ago