Concept explainers
Work the following applied problems. (See Example 5.)
Present Value for Continuously Compounded Interest The present value P of A dollars at an interest rate r per year compounded continuously for t years is
a. Would you expect
b. Would you expect
c. Would you expect
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Mathematics with Applications In the Management, Natural, and Social Sciences (12th Edition)
- The function f(x)=5x is an exponential function with base______; f(2) =_______, f(0) =______, f(2) =_______, and f(6) =_______.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_forwardYou invest $500 at an annual interest rate of 5.25, compounded continuously. How long will it take your money to double? Compare your result with that of Example 10.arrow_forward
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