10 14 points My Notes Ask Your Teacher For the year ending December 31, 2017, sa

ID: 2404393 • Letter: 1

Question

10 14 points My Notes Ask Your Teacher For the year ending December 31, 2017, sales for Corporation Y were $75.31 bilion. Beginning January 1, 2018 Corporation Y plans to invest 7.5% of their sales amount each year and they expect their sales to increase by S% each year over the next three years. Corporation Y invests into an account earning an APR of,8% compounded continuously. Assume a continuous income stream. How much money will be in the investment account on December 31, 2020 Round your answer to three decimal places 492 billion dollars How much money did Company Y invest in the account between January 1, 2018 and December 31, 2020? Round your answer to three decimal places billion dollars How much interest did Company Y earn between January 1, 2018 and December 31, 2020? Round your answer to three decimal places. If intermediate values are used, be sure to use the unrounded values to determine the answer bilion dollars

Explanation / Answer

(Amount in $ billion)

Date

Sales

Amount invested

Future Value @1.8%

Future Value

January 1,2018

75.31

5.65

5.65*e^(0.018*3)

5.65*1.0554 = 5.963

January 1,2019

79.08

5.93

5.93*e^(0.018*2)

5.93*1.0366 = 6.147

January 1,2020

83.03

6.23

6.23*e^(0.018*1)

6.23*1.0181 = 6.343

TOTAL

237.41

17.81

18.453

a) Total investment value as on December 31,2020 = 18.453

b) Total money invested = 17.81

c) Total interest earned = 18.453 - 17.81 = 0.643

Working note:

How to calculate the value of e^(0.018*3)

Step 1:

e^(0.018*3) = e^0.054

Step 2:

Multiply the power i.e. 0.054 with 0.00024417206 ans we will get 0.00001318529

Step 3:

Add 1 to the resultant figure ans we get 1.00001318529

Step 4:

Press =X (into and equal to ) in calculator for 12 times and we will get 1.0554 which is the value of e^0.054