Company D showed a profit of $1.5 million last year. The CEO ofthe company expects the profit to increase by 0.04 million dollarseach year over the next 5 years and the profits will becontinuously invested in an account bearing a 4.5% APR compoundedcontinuously.
(a) Write the flow rate, R, of the income stream. (Lett represent the number of years after the company showed aprofit of $1.5 million.)
R(t) =Ă‚Â Ă‚Â
0.04t+1.5
Ă‚Â Ă‚Â Ă‚Â million dollars per year
(b) Calculate the 5-year future value. (Round your answer to threedecimal places.)
$Ă‚Â Ă‚Â million
(c) Calculate the 5-year present value. (Round your answer to threedecimal places.)
$Ă‚Â Ă‚Â million
