Example 2. At a continuously compounded rate of p%, the following cash flows are equivalent C...
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Example 2. At a continuously compounded rate of p%, the following cash flows are equivalent C₁ C₂ C3 = = (1,2,3) (0, 0, 0, 0, 2, 4, 6, 0, 3, 6, 9) (0,q,0) (i) Find the exact values of p and q. [ Ans: p = 25 ln 3, q = 3¹/4 + 33/4 + 2] (ii) Find the exact values of future value of C₁ at t = 1. [Ans: 3¹/4 + 33/4 + 2] A Example 2. At a continuously compounded rate of p%, the following cash flows are equivalent C₁ C₂ C3 = = (1,2,3) (0, 0, 0, 0, 2, 4, 6, 0, 3, 6, 9) (0,q,0) (i) Find the exact values of p and q. [ Ans: p = 25 ln 3, q = 3¹/4 + 33/4 + 2] (ii) Find the exact values of future value of C₁ at t = 1. [Ans: 3¹/4 + 33/4 + 2] A
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