Concept explainers
PERPETUAL NET INCOME STREAM The perpetual stream of income to be derived from the investment in a proposed new soft drink is assumed to flow continually at the rate of
P(t) = 2 te0 02t
thousand dollars/year. If the prevailing interest rate is assumed to be 5%/year compounded continuously, what is the present value of the investment?
Hint: Use the formula given in Exercise 50.
50. PERPETUAL NET INCOME STREAMS The present value of a perpetual stream of income that flows continually at the rate of P(t) dollars year is given by the formula
where r is the interest rate compounded continuously. Using this formula, find the present value of a perpetual net income stream that is generated at the rate of
P(t) = 10,000 + 4000t
![Check Mark](/static/check-mark.png)
Want to see the full answer?
Check out a sample textbook solution![Blurred answer](/static/blurred-answer.jpg)
Chapter 7 Solutions
APPLIED CALCULUS FOR MGRL, LIFE, SOC SCI
- Algebra & Trigonometry with Analytic GeometryAlgebraISBN:9781133382119Author:SwokowskiPublisher:CengageCalculus For The Life SciencesCalculusISBN:9780321964038Author:GREENWELL, Raymond N., RITCHEY, Nathan P., Lial, Margaret L.Publisher:Pearson Addison Wesley,
![Text book image](https://www.bartleby.com/isbn_cover_images/9781938168383/9781938168383_smallCoverImage.gif)
![Text book image](https://www.bartleby.com/isbn_cover_images/9780321964038/9780321964038_smallCoverImage.gif)