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Concept explainers
Present Value: The present value P is the investment that is required today to yield a future value of B. if interest is compounded continuously at an APR of r, as a decimal, then the present value for an investment that will yield B future dollars after t years is given by
a. Write a formula for the present value as a function of time if the APR is 6% and the future value is
b. Make a graph of the function you found in part a. use a horizontal span of 0 to 25 years.
c. Does a small change in time have a greater effect on the present value at 1 year in the future or at 10 years in the future?
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Chapter 2 Solutions
EBK FUNCTIONS AND CHANGE: A MODELING AP
- You invest $6000 at an annual rate of 4. Find the balance after 7 years for each type of compounding. a.Quarterlyb.Monthlyc.Continuousarrow_forwardAn investment account with an annual interest rateof 7 was opened with an initial deposit of 4,000 Compare the values of the account after 9 yearswhen the interest is compounded annually, quarterly,monthly, and continuously.arrow_forward
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