A company expects profits of $40,000 per year for 3 years. If the profits will be continuously invested in an account bearing 5.

Question

2 years ago

12

4% APR compounded continuously, what is the three-year future value of this income stream

1 answer:

elixir [45] · Answer 1 · 2023-04-05T22:16:11+03:00

The amount of the three-year future value of this income stream is approximately $47,034.41.

<h3>What is the Future value?</h3>

The formula is used to derive to total sum of investment to be attained with a present value invested at a particular interest rate.

<u>Given data</u>

Pv = 40,000

i - 5.4% compounded continuously

t = 3

Future value = Present value *e^(i * t)

Future value = $40,000 * e^(5.4%*3)

Future value = $40,000 * e^(0.162)

Future value = $40,000 * 1.17586024132

Future value = $47,034.4097

Future value = $47,034.41

In conclusion, the amount of the three-year future value of this income stream is approximately $47,034.41.