+0/2 points | Previous Answers SApCalcBr1 6.2.029 My No An heiress receives an i
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+0/2 points | Previous Answers SApCalcBr1 6.2.029 My No An heiress receives an income stream from a will at a rate of ro = 50,000e0.027t dollars per year. She invests this income and earns 4.9% interest (compounded continuously. (Round your answers to two decimal places.) (a) What is the future value of the income after ten years? (b) Compute the present value of the income over a ten year period $446658X Need Help? Read It Talk to a Tutor My No 1/2 points | Previous Answers SApCalcBr1 6.2.031 The winner of a lottery is awarded $2,000,000 to be paid in annual installments of $100,000 for 20 years. Alternatively, the winner can accept a "cash value" one-time payment of $900,000. The winner estimates he can earn 8% annually on the winnings. What is the present value of the installment plan? (Round your answer to two decimal places.) 981,814.74 XExplanation / Answer
(1) (a)we know future vale for compounded continuously at rate r=4.9%
FV=PV*e^(rt)=50,000*e^(0.027t)*e^(0.049t)=50,000*e^(0.076t)
for t=10 year
FV=50,000*e^(0.076*10)=50,000*e^(0.76)=$106913.8
(b)106913.8=PV*e^(rt)
=> PV=106913.8*e^(-0.049*10)=1,06,913.8*e^(-0.49)=$65,498.2
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