The value of some good wine increases with age. Thus, if you are a wine dealer, you
Question:
The value of some good wine increases with age. Thus, if you are a wine dealer, you have the problem of deciding whether to sell your wine now, at a price of $P a bottle, or to sell it later at a higher price. Suppose you know that the amount a wine-drinker is willing to pay for a bottle of this wine t years from now is $P(1 + 20√t). Assuming continuous compounding and a prevailing interest rate of 5% per year, when is the best time to sell your wine?
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Related Book For
Applied Calculus
ISBN: 9781119275565
6th Edition
Authors: Deborah Hughes Hallett, Patti Frazer Lock, Andrew M. Gleason, Daniel E. Flath, Sheldon P. Gordon, David O. Lomen, David Lovelock, William G. McCallum, Brad G. Osgood, Andrew Pasquale
Question Posted: