We computed the present value of a continuous flow of money. Suppose that instead of a continuous flow, an amount C is deposited each year, and the annual interest rate is r. Then the present value of the cash flow over n years is (a) Show that the present value can be simplified to (b) Show that the present value,
Chapter 12, Section 12.4 #31
We computed the present value of a continuous flow of money. Suppose that instead of a continuous flow, an amount C is deposited each year, and the annual interest rate is r. Then the present value of the cash flow over n years is
(a) Show that the present value can be simplified to
(b) Show that the present value, taken over an infinite amount of time, is given by P = C/r.
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