Concept explainers
SINKING FUNDS The proprietor of Carson Hardware Store has decided to set up a sinking fund for the purpose of purchasing a computer server 2 years from now. It is expected that the server will cost $30,000. The fund grows at the rate of
where A denotes the size of the fund at any time t, r is the annual interest rate earned by the fund compounded continuously, and P is the amount (in dollars) paid into the fund by the proprietor per year (assume that this is done on a frequent basis in small deposits over the year so that it is essentially continuous). If the fund earns 5% interest per year compounded continuously, determine the size of the yearly investment the proprietor should pay into the fund.
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Applied Calculus for the Managerial, Life, and Social Sciences (MindTap Course List)
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