Your are the finance manager for a company that just had a great year. Last year’s income statement and this year’s expectations indicate that the company has a surplus of cash. You decide to invest $100,000 of this cash in a 5 year CD that compounds monthly. The total amount of the investment after the 5 years is given by:A(r)=100,000(1+ r/12)^60 . where r is the annual interest rate. Assuming that the interest rate is 3% (r = 0.03):1. What is the total amount of the investment after 5 years?2. How fast is the amount growing with respect to r, in dollars per percent?

Question
Asked Feb 27, 2019
3 views

Your are the finance manager for a company that just had a great year. Last year’s income statement and this year’s expectations indicate that the company has a surplus of cash. You decide to invest $100,000 of this cash in a 5 year CD that compounds monthly. The total amount of the investment after the 5 years is given by:

A(r)=100,000(1+ r/12)^60 . 

where r is the annual interest rate. Assuming that the interest rate is 3% (r = 0.03):

1. What is the total amount of the investment after 5 years?
2. How fast is the amount growing with respect to r, in dollars per percent?

check_circle

Expert Answer

Step 1

We have to find  total amount of the investment after 5 years,where A(r) is given by

fullscreen
Step 2

Part (1)-As formula for A(r) is giving  value of investment after 5 year so just put r=.03 to get final answer.

Work is shown below

fullscreen
Step 3

Rules of derivative i...

fullscreen

Want to see the full answer?

See Solution

Check out a sample Q&A here.

Want to see this answer and more?

Solutions are written by subject experts who are available 24/7. Questions are typically answered within 1 hour.*

See Solution
*Response times may vary by subject and question.
Tagged in

Math

Calculus

Derivative

Related Calculus Q&A

Find answers to questions asked by student like you
Show more Q&A
add