Bob and Doris Mackenzie have a new grandchild, Brenda. They want to create a trust...
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Bob and Doris Mackenzie have a new grandchild, Brenda. They want to create a trust fund for her that will yield $250,000 on her 24th birthday. a) What lump sum would they have to deposit now at 5.6%, compounded continuously, to achieve $250,000? b) Bob and Doris decide instead to invest a constant money stream of R(t) dollars per year. Find R(t) such that the accumulated future value of the continuous money stream is $250,000, assuming an interest rate of 5.6%, compounded continuously.
Bob and Doris Mackenzie have a new grandchild, Brenda. They want to create a trust fund for her that will yield $250,000 on her 24th birthday. a) What lump sum would they have to deposit now at 5.6%, compounded continuously, to achieve $250,000? b) Bob and Doris decide instead to invest a constant money stream of R(t) dollars per year. Find R(t) such that the accumulated future value of the continuous money stream is $250,000, assuming an interest rate of 5.6%, compounded continuously.
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