A movie stuntman receives an annual salary of $90,000, but becomes a quadriplegic after jumping from a cliff into water that is too shallow. He can never work again as a stuntman. Through a legal settlement with his insurance company, he is granted a continuous income stream of $90,000 per year for 20 years. The stuntman invests the money at 8.3%, compounded continuously. a) Find the accumulated future value of the continuous income stream. b) Thinking that he might not live 20 years, the stuntman negotiates a flat sum payment from the insurance company, which is the accumulated present value of the continuous income stream. What is that amount? a) The accumulated future value is $ (Round to the nearest ten dollars as needed.) b) The accumulated present value is $. (Round to the nearest ten dollars as needed.)
A movie stuntman receives an annual salary of $90,000, but becomes a quadriplegic after jumping from a cliff into water that is too shallow. He can never work again as a stuntman. Through a legal settlement with his insurance company, he is granted a continuous income stream of $90,000 per year for 20 years. The stuntman invests the money at 8.3%, compounded continuously. a) Find the accumulated future value of the continuous income stream. b) Thinking that he might not live 20 years, the stuntman negotiates a flat sum payment from the insurance company, which is the accumulated present value of the continuous income stream. What is that amount? a) The accumulated future value is $ (Round to the nearest ten dollars as needed.) b) The accumulated present value is $. (Round to the nearest ten dollars as needed.)
Chapter5: Gross Income: Exclusions
Section: Chapter Questions
Problem 43P
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