Question

A recently installed machine earns the company revenue at a continuous rate of

Answer 1

Answer: R = Pe^(kt) where R = revenue, P is present value, k is interest rate and t is time in years. (60 000 + 45 000+ 75 000)/2 = Pe^(.07*1) 90 000 = Pe^.07 P = 90 000/e^.07 = $83915.44 (60 000 + 45 000+ 75 000)/2 + 75 000(t-1) = 150 000 e^(kt) 90 000 + 75 000t - 75 000 = 150 000e^(.07t) 15 000 + 75 000t = 150 000e^(.07t) 1/10 + 1/2t = e^(.07t) ln(.1 + .5t) = .07t ln(.1+.5t)/t = .07 t = 2.12 years