D
dextar
Member
Hi I have a general question in solving questions where force of interest change. for example, q2 , apr, 2007 exam asks ot calculate.
Calculate the present value at time t = 0 of a payment stream, paid continuously from
time t = 9 to t = 12, under which the rate of payment at time t is 50e0.01t
Now the problem is it is asking us to calculate the value at t=0 . But when we integrate the expression using limits 9-12 in the question, aren't we calculating the value at t=9 instead of t=0. How would the solution change if we are told to calculate at
1) t=9 (would the expression of exp starts from taking the last limit (i.e 0.06)?
2) t=3 (should we then change our lower limit and make intervals for exp?)
I'm getting confused on the various permutations. can anyone explain the concept?
Calculate the present value at time t = 0 of a payment stream, paid continuously from
time t = 9 to t = 12, under which the rate of payment at time t is 50e0.01t
Now the problem is it is asking us to calculate the value at t=0 . But when we integrate the expression using limits 9-12 in the question, aren't we calculating the value at t=9 instead of t=0. How would the solution change if we are told to calculate at
1) t=9 (would the expression of exp starts from taking the last limit (i.e 0.06)?
2) t=3 (should we then change our lower limit and make intervals for exp?)
I'm getting confused on the various permutations. can anyone explain the concept?