Calculus with Applications (10th Edition)

Published by Pearson
ISBN 10: 0321749006
ISBN 13: 978-0-32174-900-0

Chapter 8 - Further Techniques and Applications of Integration - Chapter Review - Review Exercises - Page 456: 56

Answer

This is a continuous income stream with a rate of flow of $50000$ per year, so $R(t)=50000$. Also, $k=0.09$. The capital value is given by: $$ \begin{aligned} \int_{0}^{\infty} R(t) e^{k t} d t &=\int_{0}^{\infty} 50,000 e^{-0.09 t} d t\\ &=\lim _{b \rightarrow \infty}\int_{0}^{b} 50,000 e^{-0.09 t} d t\\ &\approx \$ 555,5556 \end{aligned} $$ So, the capital value is $\approx \$ 555,5556$

Work Step by Step

This is a continuous income stream with a rate of flow of $50000$ per year, so $R(t)=50000$. Also, $k=0.09$. The capital value is given by $$ \begin{aligned} \int_{0}^{\infty} R(t) e^{k t} d t &=\int_{0}^{\infty} 50,000 e^{-0.09 t} d t\\ &=\left.\lim _{b \rightarrow \infty}\left(\frac{50,000 e^{-0.09 t}}{-0.09}\right)\right|_{0} ^{b} \\ &=\lim _{b \rightarrow \infty}\left[\frac{50,000}{-0.09} e^{-0.09(b)}+\frac{50,000}{0.09}(1)\right] \\ &=\lim _{b \rightarrow \infty}\left[\frac{-50,000}{0.09 e^{0.09 b}}+\frac{50,000}{0.09}\right] \\ &=\lim _{b \rightarrow \infty}\left[\frac{-50,000}{0.09 e^{0.09 b}}\right]+\frac{50,000}{0.09} \\ &=(0)+\frac{50,000}{0.09} \\ &\approx \$ 555,5556 \end{aligned} $$ So, the capital value is $\approx \$ 555,5556$
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