Mathematics, 19.03.2020 02:28 jacks0292

The value of an investment of $1000 earning 5% compounded annually is V(I, R) = 1000 1 + 0.05(1 − R) 1 + I^10 where I is the annual rate of inflation and R is the tax rate for the person making the investment.

a. Calculate VI(0.03, 0.28) and VR(0.03, 0.28).

b. Determine whether the tax rate or the rate of inflation is the greater "negative" factor in the growth of the investment.

i. The rate of inflation has the greater negative influence.

ii. The tax rate has the greater negative influence

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The value of an investment of $1000 earning 5% compounded annually is V(I, R) = 1000 1 + 0.05(1 − R)...