Company C showed a profit of $1.1 million last year. The CEO of the company expe

Question

Company C showed a profit of $1.1 million last year. The CEO of the company expects the profit to decrease by 5% each year over the next five years and the profits will be continuously invested in an account bearing a 4.75% APR compounded continuously. (a) Write the flow rate, R, of the income stream. (Let t represent the number of years after the company showed a profit of $1.1 million.) R(t) = _____________million dollars per year (b) Calculate the 5-year future value. (Round your answer to three decimal places.) $______________ Millions (c) Calculate the 5-year present value. (Round your answer to three decimal places.) $______________Millions

Explanation / Answer

a>R(t)=1.1(1-5/100)^t(1+4.75)^t milion dollar..............b>.five year future value=4.3885 million dollar.............c>

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