college math

posted by .

You won the lottery. They will pay you 1 million dollars a year for 20 years. Assuming 10 percent interest compounded continuously, approximate the present value of your winnings by assuming the money is paid to you continuously over the period of each of the 20 years and in 40 years?

  • college math -

    Start with what you know.
    Continuous compound interest tells you that you will be using e^ starting with 1 million dollars. Now just plug in the time(t) at 20yrs and 40yrs into the formula

    Money received(time)=1million(e^(.10)t)

    You should have two diff. answers

Respond to this Question

First Name
School Subject
Your Answer

Similar Questions

  1. math

    A bank account earns 10 percent interest compounded continously. What annual amount of money must parents deposit each year in order to save 110000 dollars in 9 years for a child's college expenses?
  2. math college

    A bank account earns 10 percent interest compounded continously. What annual amount of money must parents deposit each year in order to save 110000 dollars in 9 years for a child's college expenses?
  3. college math

    Find the approximate (with an integral estimate) present and future values of a constant income stream of 2500 dollars per year over a period of 40 years, assume a 5 percent annual interest rate compounded continuously. Find current …
  4. college math

    A business associate who owes you 3600 dollars offers to pay you 3360 now, or else pay you three yearly installments of 1200 each, with the first installment paid now. Assume that the interest rate will be 7 percent (compounded continuously). …
  5. algebra 2

    The amount of money in an account with continuously compounded interest is given by the formula A=Pe^rt , where P is the principal, r is the annual interest rate, and t is the time in years. Calculate to the nearest hundredth of a …
  6. algebra

    The amount of money in an account with continuously compounded interest is given by the formula A=Pe^rt , where P is the principal, r is the annual interest rate, and t is the time in years. Calculate to the nearest hundredth of a …
  7. calculus

    The proprietor of Carson Hardware Store has decided to set up a sinking fund for the purpose of purchasing a computer 2 yr from now. It is expected that the purchase will involve a sum of 40000 dollars. The fund grows at the rate of …
  8. Math

    A basketball player received a contract from the New York Knicks in which he was offered $5 million a year for ten years. Determine the present value of the contract on the date of the first payment if the interest rate is 3 % per …
  9. Math

    A basketball player received a contract from the New York Knicks in which he was offered $5 million a year for ten years. Determine the present value of the contract on the date of the first payment if the interest rate is 3 % per …
  10. Math

    The Problem: You win the grand prize on a game show. You have the following choices: Option 1: $1-million dollars paid as a $25 000 annuity every year over 40 years. Option 2: The present value of option 1 if the current interest …

More Similar Questions