Answer:
a) The present value is 688.64 $
b) The accumulated amount is 1532.60 $
Step-by-step explanation:
<u>a)</u><u> The preset value equation is given by this formula:</u>
where:
- T is the period in years (T = 10 years)
- r is the annual interest rate (r=0.08)
So we have:
Now we just need to solve this integral.
The present value is 688.64 $
<u>b)</u><u> The accumulated amount of money flow formula is:</u>
We have the same equation but whit a term that depends of τ, in our case it is 10.
So we have:
The accumulated amount is 1532.60 $
Have a nice day!
