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lesya [120]
3 years ago
8

Someone invests a constant stream of $450 per year at a continuously compounding interest rate of 5%. What is the present value

of this continuous stream if it continues for 50 years? Round your answer to the nearest dollar, and do not include the dollar sign.
Business
1 answer:
mixer [17]3 years ago
4 0

Answer:

The present value of the annuity will be 8,215

Explanation:

This will be the case of an annuity.

There is an annuity of 450 dollars, at a 5% rate for 50 years.

C \times \frac{1-(1+r)^{-time} }{rate} = PV\\

c= 450

rate = 0.05

time = 50

450 \times \frac{1-(1+0.05)^{-50} }{0.05} = PV\\

PV =  $8,215.1665

rounding to nearest dollar = $8,215

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Is this a true or false question? Is it multiple choice? is it expected to be written in complete sentences as a short answer? I need more context on how to respond to the situation in the question :)
7 0
4 years ago
What is the net present value of a project that has an initial cash outflow of $7,670 and cash inflows of $1,280 in year 1, $6,9
goldfiish [28.3K]
<span>Net present value is the present value of future cash inflows discounted at the expected rate of return minus the initial investment.
 Initial cash outflow = $7670
Cash inflow during Year 1 = $1280
Cash inflow during Year 2 = $0
Cash inflow during Year 3 = $6980
Cash inflow during Year 4 = $2750

Discount rate = 12.5%

NPV = (1280/1.125^1)+(0)+(6980/1.125^3)+(2750/1.125^4)-7670
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6 0
3 years ago
Friendly’s Quick Loans, Inc., offers you “seven for nine or I knock on your door.” This means you get $7.00 today and repay $9.0
mina [271]

Answer: Friendly's would say that you were paying an APR of 1485.71%.


We arrive at the answer as follows

First we calculate the dollar interest on the $7 loan and the rate of interest.

Dollar interest = 9 -7 = 2

\mathbf{Rate of interest on the loan = \frac{2}{7}*100 = 28.5714 percent}

This 28.5714% interest is for a loan that lasts for one week.

Since a year has 52 weeks, we can find the APR as \mathbf{28.5714 * 52 = 1485.71 percent}.

6 0
3 years ago
Food that qualifies as junk may contain a lot of the following EXCEPT
yuradex [85]

Answer:

A. Milk

I hope this helps,if not sorry

5 0
3 years ago
Evaluate the economic consequences of increasing progressive taxes in order to redistribute income (6)
Troyanec [42]

Answer:

Increasing progressive taxes in order to redistribute income may be seen as a fair and noble thing, but such measure may have several unintended consequences.

Explanation:

One consequence is that if taxes are raised too high on the highest earners, these people may simply leave the country for another one where taxes are lower. Wealthy people have the means to do so in the modern economy.

Another consequence would occurr if the taxes are raised too high on corporations. Corporations may either leave the country as well, or pass through the higher costs to the consumers.

All in all, progressive taxation is seen as a fair system by many economists, but it should be implemented with care, and by making cost/benefit analysis first.

4 0
3 years ago
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