1. Consider a wine dealer who has k bottles of wine. The dealer can sell th (t = 0) or can store it for some time and then sell them later. The value of at t-th month is given by: V₁=ket The dealer can use the sales revenue as principal in a risk-free investment (e) If the dealer sells them at the optimal timing, what is the present the sales revenue?

Advanced Engineering Mathematics
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ISBN:9780470458365
Author:Erwin Kreyszig
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Chapter2: Second-order Linear Odes
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1. Consider a wine dealer who has k bottles of wine. The dealer can sell them now
(t = 0) or can store it for some time and then sell them later. The value of k bottles
at t-th month is given by:
Vt = ket
The dealer can use the sales revenue as principal in a risk-free investment at rate r.
(e) If the dealer sells them at the optimal timing, what is the present value of
the sales revenue?
Transcribed Image Text:1. Consider a wine dealer who has k bottles of wine. The dealer can sell them now (t = 0) or can store it for some time and then sell them later. The value of k bottles at t-th month is given by: Vt = ket The dealer can use the sales revenue as principal in a risk-free investment at rate r. (e) If the dealer sells them at the optimal timing, what is the present value of the sales revenue?
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