Concept explainers
Perpetual annuity Imagine that today you deposit $B in a savings account that earns interest at a rate of p% per year compounded continuously (Section 6.9). The goal is to draw an income of $I per year from the account forever. The amount of money that must be deposited is
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- An investment account was opened with aninitial deposit of 9,600 and earns 7.4 interest,compounded continuously. How much will theaccount be worth after 15 years?arrow_forwardRachel invests $15,000 at age 25. She hopes the investments will be worth when she turns 40. If the interest compounds continuously, approximately what rate of growth will she need to achieve her goal?arrow_forwardYou invest $6000 at an annual rate of 4. Find the balance after 7 years for each type of compounding. a.Quarterlyb.Monthlyc.Continuousarrow_forward
- The table shows the mid-year populations (in millions) of five countries in 2015 and the projected populations (in millions) for the year 2025. (a) Find the exponential growth or decay model y=aebt or y=aebt for the population of each country by letting t=15 correspond to 2015. Use the model to predict the population of each country in 2035. (b) You can see that the populations of the United States and the United Kingdom are growing at different rates. What constant in the equation y=aebt gives the growth rate? Discuss the relationship between the different growth rates and the magnitude of the constant.arrow_forwardThe fox population in a certain region has an annualgrowth rate of 9 per year. In the year 2012, therewere 23,900 fox counted in the area. What is the foxpopulation predicted to be in the year 2020 ?arrow_forwardFuture Value Business and finance texts refer to the value of an investment at a future time as its future value. If an investment of P dollars is compounded yearly at an interest rate of r as a decimal, then the value of the investment after t years is given by FutureValue=P1+rt. In this formula, 1+rt is known as the future value interest factor, so the formula above can be written as FutureValue=PFuturevalueinterestfactor Financial officers normally calculate this or look it up in a table a. What future value interest factor will make an investment double? b. Say you have an investment that is compounded yearly at a rate of 9%. Find the future value interest factor for a 7-year investment. c. Use the results from part b to calculate the 7-year future value if your initial investment is 5000.arrow_forward
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