Chapter 6, Problem 18RE

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10th Edition

Ron Larson

ISBN: 9781305860919

Textbook Problem

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**Present Value** A company expects its income *c* during the next 7 years to be modeled by

(a) Find the actual income for the business over the 7 years.

(b) Assuming an annual inflation rate of 4%, what is the present value of this income?

**(a)**

To determine

**To calculate:** The actual income of a company over a time period of *c* be its expected income which is given as,

Explanation

**Given Information:**

The expected income, *c*, is

**Formula used:**

The expression for the actual income over a time period of

Here, *t*.

The method of integration by parts for two differentiable function of

**Calculation:**

Consider the expected income function,

Since the time period is 4 years

**(b)**

To determine

**To calculate:** The present value of income

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