Question

for 5 years, a growing corporation places a continuous stream of $50,000 per year into an account which has a continuously compounding interest rate of 1.7%. what will be the value of this continuous stream at the end of 5 years? round your answer to the nearest integer. do not include a dollar sign or commas in your answer.'

Answer 1

To find the value of the continuous stream at the end of 5 years with a continuously compounding interest rate of 1.7%, we can use the formula for compound interest.

Step-by-step explanation:

To find the value of the continuous stream at the end of 5 years, we can use the formula for compound interest:

A = P * e^(rt)

Where:

A = the future value

P = the initial investment ($50,000 per year)

r = the interest rate per period (1.7% per year)

t = the number of years

e = the mathematical constant approximately equal to 2.71828

Substituting the given values into the formula, we get:

A = 50,000 * e^(0.017 * 5)

A = 50,000 * e^(0.085)

A ≈ 50,000 * 1.0888999

A ≈ 54,444.99

Rounding to the nearest integer, the value of the continuous stream at the end of 5 years is approximately $54,445.