Respuesta :
The capital formation of the investment function over a given period is the
accumulated capital for the period.
- (a) The capital formation from the end of the second year to the end of the fifth year is approximately 298.87.
- (b) The number of years before the capital stock exceeds $100,000 is approximately 46.15 years.
Reasons:
(a) The given investment function is presented as follows;
[tex]I(t) = 100 \cdot e^{0.1 \cdot t}[/tex]
(a) The capital formation is given as follows;
[tex]\displaystyle Capital = \int\limits {100 \cdot e^{0.1 \cdot t}} \, dt =1000 \cdot e^{0.1 \cdot t}} + C[/tex]
From the end of the second year to the end of the fifth year, we have;
The end of the second year can be taken as the beginning of the third year.
Therefore, for the three years; Year 3, year 4, and year 5, we have;
[tex]\displaystyle Capital = \int\limits^5_3 {100 \cdot e^{0.1 \cdot t}} \, dt \approx 298.87[/tex]
The capital formation from the end of the second year to the end of the fifth year, C ≈ 298.87
(b) When the capital stock exceeds $100,000, we have;
[tex]\displaystyle \mathbf{\left[1000 \cdot e^{0.1 \cdot t}} + C \right]^t_0} = 100,000[/tex]
Which gives;
[tex]\displaystyle 1000 \cdot e^{0.1 \cdot t}} - 1000 = 100,000[/tex]
[tex]\displaystyle \mathbf{1000 \cdot e^{0.1 \cdot t}}} = 100,000 + 1000 = 101,000[/tex]
[tex]\displaystyle e^{0.1 \cdot t}} = 101[/tex]
[tex]\displaystyle t = \frac{ln(101)}{0.1} \approx 46.15[/tex]
The number of years before the capital stock exceeds $100,000 ≈ 46.15 years.
Learn more investment function here:
https://brainly.com/question/25300925
