Capital value find the capital value of an asset that generates $7200 yearly income if the interest rate is as follows.
a. 5% compounded continuously
b. 10% compounded continuously

a. An asset that generates $7200 yearly income if the interest rate 5% compounded continuously, then its capital value is $140433.002

b. An asset that generates $7200 yearly income if the interest rate 10% compounded continuously, then its capital value is $68460.59

Step-by-step explanation:

For continuously compound interest

                     ---------------> eq.1

Where

P = principal amount (initial investment)

r = annual interest rate (as a decimal)

t = number of years

A = amount after time t.

Let’s solve the equation

Where,

P is unknown

                     A = P + 7200 (asset after 1 year) ---------------> eq. 2

Case A:

t = 1 (1 year)

Substitute all values in the formula (2) using the formula (1),

Case B:

t = 1 (1 year)

Substitute all values in the formula (2) using the formula (1),

its not b

step-by-step explanation:

y/x=18

step-by-step explanation: