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If an IRA is a variable-rate investment for 25 years at rate r percent per year, compounded monthly, then the future value S that accumulates from an initial investment of $1500 is S = 1500(1+0.01r/12)^300$${\mathtt{1\,500}}{\mathtt{\,\times\,}}{\left({\mathtt{1}}{\mathtt{\,\small\textbf+\,}}{\frac{{\mathtt{0.01}}{\mathtt{\,\times\,}}{\mathtt{r}}}{{\mathtt{12}}}}\right)}^{{\mathtt{300}}}$$ 

What is the rate of change of S with respect to r and what does it tell us if the interest rate is as follows? (Round your answers to two decimal places.)

(a) 6%

(got the answer) Correct: Your answer is correct.

If we were to increase the rate by 1%, the future value of the investment would increase by about $ " "?

(b) 12%

(got the answer)  Correct: Your answer is correct.

If we were to increase the rate by 1%, the future value of the investment would increase by about $ " "?

 

" " ? are the questions i dont get

 
Guest Apr 9, 2015

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