Continuous compounding
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Suppose $1000000.00 will be recieved after 25 years. Find the value 5 years from now (t=5), V(5), assuming continuous compounding at the rate
r(t) = 0.05 + t/1000 if t<=10 and 0.06 t >10.
I know the answer is 304982.77, but can not get it to work out. Please show all of your work.
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The expert examines continuous compounding.
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Hi there,
Here is my answer:
Suppose the original principal is x.
A=P*e^(rt) is the formula for the continuous compounding. Since r varies ...
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