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A company expects profits of $40,000 per year for 3 years. If the profits will be continuously invested in an account bearing 5.4% APR compounded continuously, what is the three-year future value of this income stream

Sagot :

Tundexi

The amount of the three-year future value of this income stream is approximately $47,034.41.

What is the Future value?

The formula is used to derive to total sum of investment to be attained with a present value invested at a particular interest rate.

Given data

Pv = 40,000

i - 5.4% compounded continuously

t = 3

Future value = Present value *e^(i * t)

Future value = $40,000 * e^(5.4%*3)

Future value = $40,000 * e^(0.162)

Future value = $40,000 * 1.17586024132

Future value = $47,034.4097

Future value = $47,034.41

In conclusion, the amount of the three-year future value of this income stream is approximately $47,034.41.

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