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You are planning to invest in fine wine. Each case costs $100 (at time 0), and you know from experience that the (future) value of
You are planning to invest in fine wine. Each case costs $100 (at time 0), and you know from experience that the (future) value of a case of wine held fort years is100sqrt(t) fort1. (Suppose that the value is100 for0 How many years should you hold the case of wine before selling it? (Consider only integer years. Suppose that interest is compounded discretely (annually), not continuously.) How much money will you receive for the case of wineat the time of its sale? What is the net present value of that investment?
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