Find the present value of this investment if the prevailing interest rate is 6%/year compounded continuously. (Round your answer to the nearest whole number.)

Question

Present Value of an Investment

 Suppose an investment is expected to generate income at the rate of

R(t) = 200,000

dollars/year for the next 4 years.

Answer 1

PV = ∫₀⁴200000e^{- 0.06t}dt = 200000/(-0.06)e^{- 0.06t}₀⁴ = - 10000000/3(e^{- 0.24} - 1) = $711240.46