a. An asset that generates $7200 yearly income if the interest rate 5% compounded continuously, then its capital value is $140433.002
b. An asset that generates $7200 yearly income if the interest rate 10% compounded continuously, then its capital value is $68460.59
<u>Step-by-step explanation:</u>
For continuously compound interest
---------------> eq.1
Where
P = principal amount (initial investment)
r = annual interest rate (as a decimal)
t = number of years
A = amount after time t.
Let’s solve the equation
Where,
P is unknown
A = P + 7200 (asset after 1 year) ---------------> eq. 2
<u>Case A:
</u>
t = 1 (1 year)
Substitute all values in the formula (2) using the formula (1),
<u>Case B:</u>
t = 1 (1 year)
Substitute all values in the formula (2) using the formula (1),
Answer:
It's 70.4 because i subtracted the 2 numbers and it gave me 9.6 just like 80-9.6. I don't know if i'm right, please correct me if i'm wrong. I'm still not sure...
Step-by-step explanation:
43-123= -80
80-9.6=70.4
80-70.4= 9.6
2$ more than. I’m pretty sure that is the answer if not I’m sorry