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k(1+g)" Suppose you own a rare book whose value at time is given by v(D =k(1+g)", with A.g>0 and osasl Assuming a constant interest rate r, its present value today is given by PV - Given this information (1+r)' answer the following questions: a. Using calculus, derive the expression for the optimal time to sell the book (i.e. the timea b. Verify that the second order condition is satisfied. C. Assume that k= 100, g=0.02, r=0,01 and a0.35. What is the optimal time which py is maximized), in terms of the model's parameters. o sell under these parameter values?

k(1+g)" Suppose you own a rare book whose value at time is given by v(D =k(1+g)", with A.g>0 and osasl Assuming a constant interest rate r, its present value today is given by PV - Given this information (1+r)' answer the following questions: a. Using calculus, derive the expression for the optimal time to sell the book (i.e. the timea b. Verify that the second order condition is satisfied. C. Assume that k= 100, g=0.02, r=0,01 and a0.35. What is the optimal time which py is maximized), in terms of the model's parameters. o sell under these parameter values?

Calculus: Early Transcendentals
Calculus: Early Transcendentals
8th Edition
ISBN:9781285741550
Author:James Stewart
Publisher:James Stewart
Chapter1: Functions And Models
Section: Chapter Questions
Problem 1RCC: (a) What is a function? What are its domain and range? (b) What is the graph of a function? (c) How...
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k(1+g)" Suppose you own a rare book whose value at time is given by V (t) =k(1+e)", with k.g>0 and osa <l. Assuming a constant interest rate r, its present value today is given by PV = Given this information, (1+r)' answer the following questions: a. Using calculus, derive the expression for the optimal time to sell the book (i.e. the time at which py is maximized), in terms of the model's parameters. b. Verify that the second order condition is satisfied. c. Assume that k=100, g=0.02, r=0,01 and a=0.35. What is the optimal time to sell under these parameter values?
Transcribed Image Text:k(1+g)" Suppose you own a rare book whose value at time is given by V (t) =k(1+e)", with k.g>0 and osa <l. Assuming a constant interest rate r, its present value today is given by PV = Given this information, (1+r)' answer the following questions: a. Using calculus, derive the expression for the optimal time to sell the book (i.e. the time at which py is maximized), in terms of the model's parameters. b. Verify that the second order condition is satisfied. c. Assume that k=100, g=0.02, r=0,01 and a=0.35. What is the optimal time to sell under these parameter values?
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