An investment is valued approximately by the function f (t) = 50, 000e0:2v If the annual discount rate is 5%, when would the present value of this investment be maximized? What is this optimal present value of the investment? What is the initial value of the investment at the zero moment? Use a second-order condition to prove that the present value is, indeed, maximized.

An investment is valued approximately by the function f (t) = 50, 000e0:2v If the annual discount rate is 5%, when would the present value of this investment be maximized? What is this optimal present value of the investment? What is the initial value of the investment at the zero moment? Use a second-order condition to prove that the present value is, indeed, maximized.

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter16: The Markets For Labor, Capital, And Land

Section: Chapter Questions

Problem 12P

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