A company earns 2% per month on its assets, paid continuously, and its expenses are paid out
Question:
A company earns 2% per month on its assets, paid continuously, and its expenses are paid out continuously at a rate of $80,000 per month.
(a) Write a differential equation for the value, V, of the company as a function of time, t, in months.
(b) What is the equilibrium solution for the differential equation? What is the significance of this value for the company?
(c) Solve the differential equation found in part (a).
(d) If the company has assets worth $3 million at time t = 0, what are its assets worth one year later?
Step by Step Answer:
a The value of the company satisfies Rate of change of value Rate interest ...View the full answer
Applied Calculus
ISBN: 9781119275565
6th Edition
Authors: Deborah Hughes Hallett, Patti Frazer Lock, Andrew M. Gleason, Daniel E. Flath, Sheldon P. Gordon, David O. Lomen, David Lovelock, William G. McCallum, Brad G. Osgood, Andrew Pasquale
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