4. Two investments, A and B, produce a continuous income stream of 3%, compounded continuously. The rate of flow of income from investment A is f(t) = 3000e0.04t and the rate of flow of income from investment B is expected to be g(t) = 5000. (a) Find the total income produced by each of the two investments over the 7-year period. (b) Find the future value, the accumulated amount of money flow, of each

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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For (d) and (e)

4. Two investments, A and B, produce a continuous income stream of 3%,
compounded continuously. The rate of flow of income from investment A
is f(t) = 3000e0.04t and the rate of flow of income from investment B is
expected to be g(t) = 5000.
(a) Find the total income produced by each of the two investments over the
7-year period.
(b) Find the future value, the accumulated amount of money flow, of each
of the two investments for 7 years.
(c) Compute the interest earned by each investment over the 7-year period.
(d) Find the present value of each of the two investments.
(e) Interpret the answers determined in (a) to (d)
Transcribed Image Text:4. Two investments, A and B, produce a continuous income stream of 3%, compounded continuously. The rate of flow of income from investment A is f(t) = 3000e0.04t and the rate of flow of income from investment B is expected to be g(t) = 5000. (a) Find the total income produced by each of the two investments over the 7-year period. (b) Find the future value, the accumulated amount of money flow, of each of the two investments for 7 years. (c) Compute the interest earned by each investment over the 7-year period. (d) Find the present value of each of the two investments. (e) Interpret the answers determined in (a) to (d)
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