Application of Derivatives Word Problem : Future Value of Investment
October 1st, 2022
Assume that you collect P dollars from a transaction and being a mathematics wiz, you have developed formula to calculate the future value of your investment:
where, r is the rate of interest and t is the time horizon.
Suppose you invest your profit, P dollars, from above transaction, and invest it in a bank at 5% rate of interest for 7 years.
What will be the Future Value of this investment after 7 years? Find out dF/dt, assuming P and r are constant. In terms of money, what does dF/dt represent? Also, find out dF/dr, assuming P and t are constant. In terms of money, what does dF/dr represent?