Calculus (3rd Edition)

Published by W. H. Freeman
ISBN 10: 1464125260
ISBN 13: 978-1-46412-526-3

Chapter 8 - Techniques of Integration - 8.7 Improper Integrals - Exercises - Page 442: 80

Answer

$\approx\$ 333,333.33$

Work Step by Step

The present value of the income stream after $T$ years can be computed as: $\int_0^T (10,000e^{0.01t})e^{-0.04t} dt=[\dfrac{10,000e^{0.03t}}{-0.03}]_0^T\\=333,333.33(1-e^{-0.03T}) $ Now, the present value of the entire income stream will be: $\int_0^{\infty} 10,000e^{-0.03t} dt=\lim\limits_{T \to \infty}\int_0^T 10,000e^{-0.03t} \ dt \\=\lim\limits_{T \to \infty} 333,3333.33 (1-e^{-0.03T} \\ \approx\$ 333,333.33$
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