if it earns 4.4 % interest compounded continuously. (b) What is its final value?
(a) The present value of the continuous flow of money is .
(b) The final value of the continuous flow of money is
(a) The present value of the continuous flow of money is .
(b) The final value of the continuous flow of money is
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da/dt = 11/250 a + 1800 .................................... 11/250 = 4.4%
a e^(-11t/250) = 1800 ∫ e^(-11t/250) dt
a e^(-11t/250) = 450000/11 (1 - e^(-11t/250)) .... assuming a[0] = 0
a = 450000/11 (e^(11t/250) - 1)
a(3) = $5,772.61
v = 5772.61 / e^(11(3)/250)
Answer (a): $5,058.78
Answer (b): $5,772.61
a e^(-11t/250) = 1800 ∫ e^(-11t/250) dt
a e^(-11t/250) = 450000/11 (1 - e^(-11t/250)) .... assuming a[0] = 0
a = 450000/11 (e^(11t/250) - 1)
a(3) = $5,772.61
v = 5772.61 / e^(11(3)/250)
Answer (a): $5,058.78
Answer (b): $5,772.61