Disability Insurance Settlement. Dale was a furnace maintenance employee who earned a salary of $70,000 per year before he was injured on the job. Through a settlement with is employer’s insurance company, he is granted a continuous income stream of $40,000 per year for 25 yr. Dale invests the money at 5%, compounded continuously. a. Find the accumulated future value of the continuous income stream. Round your answer to the nearest $10. b. Thinking that he might not live for 25 yr, Dale negotiates a flat sum payment from the insurance company, which is the accumulated present value of the continuous stream plus $100,000. What is that amount? Round your answer to the nearest $10.
Disability Insurance Settlement. Dale was a furnace maintenance employee who earned a salary of $70,000 per year before he was injured on the job. Through a settlement with is employer’s insurance company, he is granted a continuous income stream of $40,000 per year for 25 yr. Dale invests the money at 5%, compounded continuously. a. Find the accumulated future value of the continuous income stream. Round your answer to the nearest $10. b. Thinking that he might not live for 25 yr, Dale negotiates a flat sum payment from the insurance company, which is the accumulated present value of the continuous stream plus $100,000. What is that amount? Round your answer to the nearest $10.
Solution Summary: The author explains how Dale invests a continuous income stream of 40,000 per year at 5% compounded continuously for 25 years.
Disability Insurance Settlement. Dale was a furnace maintenance employee who earned a salary of $70,000 per year before he was injured on the job. Through a settlement with is employer’s insurance company, he is granted a continuous income stream of $40,000 per year for 25 yr. Dale invests the money at 5%, compounded continuously.
a. Find the accumulated future value of the continuous income stream. Round your answer to the nearest $10.
b. Thinking that he might not live for 25 yr, Dale negotiates a flat sum payment from the insurance company, which is the accumulated present value of the continuous stream plus $100,000. What is that amount? Round your answer to the nearest $10.
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