The tree in Karura forest grow such that the volume of timber at time t can be represented as 900t + 5ot+ 60t3 +7¢4 Q (t) = (Note that these trees clo not followw a typical biological growth function). The annual real interest rate is 0:19 and each unit of timber Can be sold at a price of Ksh. 100 net of harvest costs. Assume there is no opfort unity Cost of using land to grow tmber . Assume also that at Ě = 89 years from beginning of R trees growth, Kinyua obtoined sole Ownership of the forest threugh a surprise bequest · ) What is the marginal benefit Hinyua would get by H aiting to cut the trees for another year ? i) What is the marginal cast be would incur by Waiting to cut the trees for another year? ii) Should he Wait another year to cut clown the trees ? (N) Assume that the interest rate is different such that t=89 is the exact trees. What is opt imal time to hervest the the annual interest rate ?
The tree in Karura forest grow such that the volume of timber at time t can be represented as 900t + 5ot+ 60t3 +7¢4 Q (t) = (Note that these trees clo not followw a typical biological growth function). The annual real interest rate is 0:19 and each unit of timber Can be sold at a price of Ksh. 100 net of harvest costs. Assume there is no opfort unity Cost of using land to grow tmber . Assume also that at Ě = 89 years from beginning of R trees growth, Kinyua obtoined sole Ownership of the forest threugh a surprise bequest · ) What is the marginal benefit Hinyua would get by H aiting to cut the trees for another year ? i) What is the marginal cast be would incur by Waiting to cut the trees for another year? ii) Should he Wait another year to cut clown the trees ? (N) Assume that the interest rate is different such that t=89 is the exact trees. What is opt imal time to hervest the the annual interest rate ?
Chapter17: Capital And Time
Section: Chapter Questions
Problem 17.7P
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