Phill and Laura Dutch have a new grandchild, Brenda. They want to create a trust fund for her that will yield $230,000 on her 25th birthday. a) What lump sum would they have to deposit now at 5.8%, compounded continuously, to achieve $230,000? b) Phill and Laura decide instead to invest a constant money stream of R(t) dollars per year. Find R(t) such that the accumulated future value of the continuous money stream is $230,000, assuming an interest rate of 5.8%, compounded continuously.
Phill and Laura Dutch have a new grandchild, Brenda. They want to create a trust fund for her that will yield $230,000 on her 25th birthday. a) What lump sum would they have to deposit now at 5.8%, compounded continuously, to achieve $230,000? b) Phill and Laura decide instead to invest a constant money stream of R(t) dollars per year. Find R(t) such that the accumulated future value of the continuous money stream is $230,000, assuming an interest rate of 5.8%, compounded continuously.
Chapter6: Exponential And Logarithmic Functions
Section: Chapter Questions
Problem 8RE: Suppose an investment account is opened with aninitial deposit of 10,500 earning 6.25...
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Transcribed Image Text:Phill and Laura Dutch have a new grandchild, Brenda. They want to create a trust fund for her that will yield $230,000 on her 25th birthday.
a) What lump sum would they have to deposit now at 5.8%, compounded continuously, to achieve $230,000?
b) Phill and Laura decide instead to invest a constant money stream of R(t) dollars per year. Find R(t) such that the accumulated future value of the
continuous money stream is $230,000, assuming an interest rate of 5.8%, compounded continuously.
a) To achieve $230,000, they would have to deposit $
(Round to the nearest cent as needed.)
b) To achieve $230,000, they would need a constant money stream of $
per year.
(Round to the nearest cent as needed.)
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