As scotch whiskey ages, its value increases. One dollar of scotch at year 0 is worth $V(t)=\exp \{2 \sqrt{t}-0.15 t\}$ dollars at time $t .$ If the interest rate is 5 percent, after how many years should a person sell scotch in order to maximize the $P D V$ of this sale?
Added by Ronald C.
Step 1
The PDV is given by the formula: PDV(t) = V(t) / (1 + r)^t, where r is the interest rate. In this case, r = 0.05, and V(t) = exp{2√t - 0.15t}. So, we have: PDV(t) = exp{2√t - 0.15t} / (1 + 0.05)^t Show more…
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