Question

The function in Exercise represents the rate of flow of money in dollars per year. Assume a 10-year period at 8% compounded continuously and find the following: (a) the present value; (b) the accumulated amount of money flow at t=10.

f(t)=800e0.05t

Answer 1

Answer: f(t) = 800e^0.08*10 =

= 800(2.7183^0.08*10

=$8666.3

Explanation:

f(t)= pe^rt where f(t) is future value,

P is present value, e is mathematical constant and it is approximately equal to 2.7183, r is rate of interest and it is equal to 8%, t is number of years and it is equal to 10. Future value is the accumulated value.

P = f(t) ÷{e^rt).