An investment generates earnings over a 20-year period that is received continuously atannual rates of £500e-0.02t during the first 15 years and £250e0.16t during the remaining 5years.(i) Calculate the present value of the earnings assuming an annual force of interestof 6%.(ii) Hence, calculate the accumulated value of the earnings at the end of 20 years.

To calculate the present value of the earnings, we need to discount each year's earnings back to the…

Answered: An investment generates earnings over a…

Advanced Engineering Mathematics

10th Edition

ISBN:9780470458365

Author:Erwin Kreyszig

Publisher:Erwin Kreyszig

Chapter2: Second-order Linear Odes

Section: Chapter Questions

Problem 1RQ

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An investment generates earnings over a 20-year period that is received continuously at annual rates of £500e-0.02t during the first 15 years and £250e0.16t during the remaining 5 years. (i) Calculate the present value of the earnings assuming an annual force of interest of 6%.