Suppose a piece land has a value in t years from now given by V (t) = 2^ t . The current interest is r.

(a) What is the present value of the piece of land?

(b) When do you recommend the best time for the owner to sell the land?

(c) How do you know your answer to part (b) is the actual best time to sell the land? Explain

(d) Show how your answer to part (b) changes when the value of interest r changes.

4. Suppose a piece land has a value in t years from now given by V(t) = 2Vt. The current interest is r. (a) What is the present value of the piece of land? (1) (b) When do you recommend the best time for the owner to sell the land? (2) (c) How do you know your answer to part (b) is the actual best time to sell the land? Explain (2) (d) Show how your answer to part (b) changes when the value of interest r changes. (2)