Question

Company MNO generates between 10800 and 14500 million dollars revenue per year. Suppose that the company's revenue stays within this range. Use an interest rate of 9% per year compounded continuously. Fill in the blanks in the paragraph below, rounding your answers to the nearest tenth.

The present value of MNO's revenue over a five year period is between ________________ and ________________ million dollars. Over a twenty-five year period, the present value falls between __________________ and ________________ million dollars.

Answer 1

PART(a): 5-year period

The present value is given by,

The first bound is given by,

after integrating,

The end bound is given by,

after integrating,

The present value of MNO's revenue over a five year period is between 43484.6 and 58382.1 million dollars

PART(b): 25-year period

use the same formula as part(a)

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