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?
Derivatives are used to calculate the future value of an investment. The solution is detailed and well presented. The response received a rating of "5/5" from the student who originally posted the question.