An oil company discovered an oil reserve of 110 million barrels. For time t> 0, in years, the company's extraction plan is a linear declining function of time as follows: q(t) = a – bt, where q(t) is the rate of extraction of oil in millions of barrels per year at time t and b = 0.05 and a = 10. (a) How long does it take to exhaust the entire reserve? time = years (b) The oil price is a constant 30 dollars per barrel, the extraction cost per barrel is a constant 16 dollars, and the market interest rate is 9 percent per year, compounded continuously What is the present value of the company's profit? value = millions of dollars

Algebra & Trigonometry with Analytic Geometry
13th Edition
ISBN:9781133382119
Author:Swokowski
Publisher:Swokowski
Chapter5: Inverse, Exponential, And Logarithmic Functions
Section: Chapter Questions
Problem 18T
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An oil company discovered an oil reserve of 110 million barrels. For time t > 0, in years, the company's extraction plan is a linear declining function of time as follows:
q(t) = a – bt,
where g(t) is the rate of extraction of oil in millions of barrels per year at time t and b = 0.05 and a = 10.
(a) How long does it take to exhaust the entire reserve?
time =
years
(b) The oil price is a constant 30 dollars per barrel, the extraction cost per barrel is a constant 16 dollars, and the market interest rate is 9 percent per year, compounded continuously.
What is the present value of the company's profit?
value =
millions of dollars
Transcribed Image Text:An oil company discovered an oil reserve of 110 million barrels. For time t > 0, in years, the company's extraction plan is a linear declining function of time as follows: q(t) = a – bt, where g(t) is the rate of extraction of oil in millions of barrels per year at time t and b = 0.05 and a = 10. (a) How long does it take to exhaust the entire reserve? time = years (b) The oil price is a constant 30 dollars per barrel, the extraction cost per barrel is a constant 16 dollars, and the market interest rate is 9 percent per year, compounded continuously. What is the present value of the company's profit? value = millions of dollars
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