How interest is compounded continuously at normal rate

Reference no: EM13223978

1. Income from a project is expected to decline at a constant rate from a initial value of $500,000 at time 0 to a final value of $40,000 at the end of year 3. If interest is compounded continuously at a nominal annual rate of 11%, determine the present value of this continuous cash flow.

2. A sum of $16,000per year will be received uniformly over a five-year period beginning two years from today. What is the present value of this deferred- funds flow if interested is compounded continuously at a normal rate of 9%.

Reference no: EM13223978

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