Answer:
The profit decreases by $ 375 for every $ 1 increase in the selling price.
Step-by-step explanation:
From the definition of the secant line we get that the average rate of change of , where
is the selling price of the product, measured in dollars per unit, is:
(1)
Now we evaluate the function at each bound:
x = 50
x = 55
Then, the average rate of change is:
Hence, the profit decreases by $ 375 for every $ 1 increase in the selling price.
We are asked to determine the present value of an annuity that is paid at the end of each period. Therefore, we need to use the formula for present value ordinary, which is:
Where:
Since the interest is compounded semi-annually this means that it is compounded 2 times a year, therefore, k = 2. Now we need to convert the interest rate into decimal form. To do that we will divide the interest rate by 100:
Now we substitute the values:
Now we solve the operations, we get:
Therefore, the present value must be $39462.50