Explanation Given information: A Company is expected to earn $50,000 peryear, at a continuous rate, for 8 years. You can invest the earnings at an interest rate of 7% compounded continuously. Formula used: Present value , P = ∫ 0 M S ( t ) e − r t d t Where S ( t ) is sale rate per year, t is the time, P is present value and r is rate of interest. Calculation: In order to find that whether we should buy or not, we have to compute the present value and if the present value is greater than $350,000 we can buy it, otherwise not. The present value is given by ∫ 0 8 50000 e − 0.07 t d t = 50000 ( e − 0

Applied Calculus, 6e WileyPLUS + Loose-leaf

6th Edition

ISBN: 9781119408901

Author: Deborah Hughes-Hallett, Andrew M. Gleason, Patti Frazer Lock, Daniel E. Flath

Publisher: Wiley (WileyPLUS Products)

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Chapter 6.5, Problem 17P

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If you have the chance to buy the rights to the earnings of the company now for $350,000, whether should you buyor not.

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Chapter 6.5, Problem 16P

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Chapter 6 Solutions

Applied Calculus, 6e WileyPLUS + Loose-leaf

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If you have the chance to buy the rights to the earnings of the company now for $350,000, whether should you buyor not.

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Chapter 6 Solutions

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If you have the chance to buy the rights to the earnings of the company now for $350,000, whether should you buyor not.