CPM Homework Help : CALC Problem 6-140

Steps (a):

We are given a value function, V(t). Notice that t = years since 1991. Evaluate for the year 2000.

Hint (b):

Value = V(t) = 461,100(1.12)^t

Examine the equation above:

What is the annual interest rate?

What is the initial value of the card?

Hint (b):

Hint (c):

Unlike average value (AROC), actual value (IROC) must be found with a derivative.

Steps (c):

Let V '(t) = your answer in part (b).

Answer (c):

The card was worth its average value in 1995 or 1996.