Somebody offers to pay you money in one of the following ways: • Two $50 payments, one six months from now and one twelve months from now.
• Payment in a continuous cash flow over the next year at a constant rate of $99 per year.
These payments are to be deposited into a bank account that earns 10% interest compounded continuously.You want to determine which plan is preferable, i.e., which plan has a larger present value.Find the present value of the first payment plan.Then use a Riemann sum converted into a definite integral to get the exact present value of the second payment plan.Which payment plan has the larger present value?
A) The second one
B) The first one
Correct Answer:
Verified
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