Question

please help, no calculator, in fraction form pleaseAn newly opened restaurant is projected to generate revenue at a rate of R(t) = 150000 dollars/year for the next 4 years. If the interest rate is 2.8%/year compounded continuously, find the future value of this Income stream after 4 years

Answer 1

677,890.77 dollars.

Explanation:

To find the future value of the income stream, we can use the continuous compound interest formula:

FV = Pe^(rt)

Where FV is the future value, P is the present value, e is Euler's number (approximately 2.71828), r is the interest rate, and t is the time period.

In this case, the present value (P) is the revenue generated at a rate of R(t) = 150000 dollars/year for 4 years, so:

P = 150000 dollars/year * 4 years = 600000 dollars

The interest rate (r) is 2.8%/year, or 0.028/year as a decimal. The time period (t) is also 4 years.

Substituting these values into the formula, we get:

FV = 600000 * e^(0.028*4)

FV = 677,890.77 dollars

Therefore, the future value of this income stream after 4 years with continuous compounding at an interest rate of 2.8% per year is 677,890.77 dollars.