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Crank
3 years ago
13

A large corporation starts at time t = 0 to invest part of its receipts continuously at a rate of P dollars per year in a fund f

or future corporate expansion. Assume that the fund earns r percent interest per year compounded continuously. So, the rate of growth of the amount A in the fund is given by dA/dt = rA + P where A = O when t = 0. Solve this differential equation for A as a function of t.
Mathematics
1 answer:
Andrews [41]3 years ago
4 0

Answer:

A = \frac{P}{r}\left( e^{rt} -1 \right)

Step-by-step explanation:

This is <em>a separable differential equation</em>. Rearranging terms in the equation gives

                                                \frac{dA}{rA+P} = dt

Integration on both sides gives

                                            \int \frac{dA}{rA+P} = \int  dt

where c is a constant of integration.

The steps for solving the integral on the right hand side are presented below.

                               \int \frac{dA}{rA+P} = \begin{vmatrix} rA+P = m \implies rdA = dm\end{vmatrix} \\\\\phantom{\int \frac{dA}{rA+P} } = \int \frac{1}{m} \frac{1}{r} \, dm \\\\\phantom{\int \frac{dA}{rA+P} } = \frac{1}{r} \int \frac{1}{m} \, dm\\\\\phantom{\int \frac{dA}{rA+P} } = \frac{1}{r} \ln |m| + c \\\\&\phantom{\int \frac{dA}{rA+P} } = \frac{1}{r} \ln |rA+P| +c

Therefore,

                                        \frac{1}{r} \ln |rA+P| = t+c

Multiply both sides by r.

                               \ln |rA+P| = rt+c_1, \quad c_1 := rc

By taking exponents, we obtain

      e^{\ln |rA+P|} = e^{rt+c_1} \implies  |rA+P| = e^{rt} \cdot e^{c_1} rA+P = Ce^{rt}, \quad C:= \pm e^{c_1}

Isolate A.

                 rA+P = Ce^{rt} \implies rA = Ce^{rt} - P \implies A = \frac{C}{r}e^{rt} - \frac{P}{r}

Since A = 0  when t=0, we obtain an initial condition A(0) = 0.

We can use it to find the numeric value of the constant c.

Substituting 0 for A and t in the equation gives

                         0 = \frac{C}{r}e^{0} - \frac{P}{r} \implies \frac{P}{r} = \frac{C}{r} \implies C=P

Therefore, the solution of the given differential equation is

                                   A = \frac{P}{r}e^{rt} - \frac{P}{r} = \frac{P}{r}\left( e^{rt} -1 \right)

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