PRESENT 9. VALUE OF AN INVESTMENT Suppose an invest-
ment is expected to generate income at the rate of
R(t) = 200,000
dollars/year for the next 5 yr. Find the present value of this
investment if the prevailing interest rate is 8%/year com-
pounded continuously.
10. FRANCHISES Camille purchased a l5-yr franchise for a
computer outlet store that is expected to generate income at
the rate of
R(t) = 400,000
dollars/year. If the prevailing interest rate is 10%/year
compounded continuously,. find the present value of the
franchise. ,
11. THE AMOUNT OF AN ANNUITY Find the amount of an
annuity if $250/month is paid into it for a period of 20 yr,
earning interest at the rate of 8%/year compounded con-
tinuously.
12. THE AMOUNT OF AN ANNUITY Find the amount of an
annuity if $400/month is paid int6 it for a period of 20 yr, ..
earning interest at the rate of 8%/year compounded con-
tinuously.
13. THE AMOUNT OF AN ANNUITY Aiso deposits
$150/month in a savings account paying 8%/year com-
pounded continuously. Estimate the amount that will be in
his account after 15 yr.
14. CUSTODIAL ACCOUNTS The Armstrongs wish to estab-
lish a custodial account to finance their children's education.
If they deposit $200 monthly for 10 yr in a savings account
paying compounded 9%/year continuously, how much will
their savings account be worth at the end of this period?
15. IRA ACCOUNTS Refer to Example 4, page 475. Suppose
Marcus makes his IRA payment on April 1, 1990, and annu-
ally thereafter. If interest is paid at ,the same initial rate,
approximately how much will Marcus have in his account at
the beginning of the year 2006?
16. PRESENT VALUE OF AN ANNUITY Estimate the present
value of an annuity if payments are $800 monthly for 12 yr
and the account earns interest at the rate of 10%/year com-
pounded continuously.
17. PRESENT VALUE OF AN ANNUITY Estimate the present
value of an annuity if payments are $1200 monthly for 15 yr
and th~account earns interest at the rate of 10%/year com-
pounded continuously.
18. LOTTERY PAYMENTS A state lottery commission pays the
winner of the "Million Dollar" lottery 20 annual installments
of $50,000 each. If the prevailing interest rate is 8%/year
compounded continuously, find the present value of the win-
ning ticket.
19. REVERSE ANNUITY MORTGAGES Sinclair wishes to sup-
plement his retirement income by $300/month for the next
10 yr. He plans to obtain a reverse annuity mortgage (RAM)
on his home to meet this need. E~timate the amount of the