Concept explainers
PERPETUAL NET INCOME STREAMS The present value of a perpetual stream of income that flows continually at the rate of P(t) dollars year is given by the formula
where r is the interest rate compounded continuously. Using this formula, find the present value of a perpetual net income stream that is generated at the rate of
P(t) = 10,000 + 4000t dollars/year.
Hint:
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Applied Calculus for the Managerial, Life, and Social Sciences (MindTap Course List)
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