Question

If a hire tools firms that their net profit (return) from hiring tools decreasing by 10% per their met gain on a certain tool this year is $400, find the possible total of all future profit from this tool (assuming tools last forever).

a) $4000
b) $4400
c) $3600
d) $4800

Answer 1

To find the total future profit from the tool, we can use the formula for the sum of a geometric series. Given that the net profit is decreasing by 10% each year and the gain in the first year is $400, the possible total future profit from the tool is $4000. The correct option is a) $4000.

Step-by-step explanation:

To find the possible total of all future profit from this tool, we can use the concept of a geometric series. Since the net profit is decreasing by 10% each year, the profit in the first year is $400. Let's call this amount 'a'. The common ratio, which represents the decrease factor, is 0.9. We can use the formula for the sum of a geometric series to calculate the total future profit:

S = a / (1 - r)

Plugging in the values, we have:

S = $400 / (1 - 0.9)

S = $400 / 0.1

S = $4000

Therefore, the possible total of all future profit from this tool is $4000. So, the correct option is a) $4000.