5. A venture capitalist is offered two opportunities requiring the same initial investment, but only one can be chosen. Help the investor by finding the value of each opportunity in today's dollars. The investor assumes a general earnings rate of 4.8% compounded continuously. a) Option A will return a constant $60000 yearly in a continuous manner for 15 years. b) Option B will return $42000 in a continuous stream that will also grow at 6% continuously for 15 years, so has payment function f(t)=42000eº c) Which option should the investor choose, based on the best total value? 0.06

Calculus: Early Transcendentals
8th Edition
ISBN:9781285741550
Author:James Stewart
Publisher:James Stewart
Chapter1: Functions And Models
Section: Chapter Questions
Problem 1RCC: (a) What is a function? What are its domain and range? (b) What is the graph of a function? (c) How...
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5. A venture capitalist is offered two opportunities requiring the same initial investment, but only one can
be chosen. Help the investor by finding the value of each opportunity in today’s dollars. The investor
assumes a general earnings rate of 4.8% compounded continuously.
a) Option A will return a constant $60000 yearly in a continuous manner for 15 years.
b) Option B will return $42000 in a continuous stream that will also grow at 6% continuously for 15
years, so has payment function f(t)= 42000e"
c) Which option should the investor choose, based on the best total value?
0.06
Transcribed Image Text:5. A venture capitalist is offered two opportunities requiring the same initial investment, but only one can be chosen. Help the investor by finding the value of each opportunity in today’s dollars. The investor assumes a general earnings rate of 4.8% compounded continuously. a) Option A will return a constant $60000 yearly in a continuous manner for 15 years. b) Option B will return $42000 in a continuous stream that will also grow at 6% continuously for 15 years, so has payment function f(t)= 42000e" c) Which option should the investor choose, based on the best total value? 0.06
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