# Question: Repeat Problem 17 18 assuming that the volatility of gold is

Repeat Problem 17.18 assuming that the volatility of gold is 20% and that once opened, the mine can be costlessly shut down once, and then costlessly reopened once. What is the value of the mine? What are the prices at which the mine will be shut down and reopened?

## Relevant Questions

Consider again the project in Problem 17.2, only suppose that the widget price is unchanging and the cost of investment is declining at 2% per year. When will you invest? What is the value today of the project? Consider the widget investment problem of Section 17.1 with the following modification. The expected growth rate of the widget price is zero. (This means there is no reason to consider project delay.) Each period, the widget ...You drawthese five numbers from a standard normal distribution: {−1.7, 0.55, −0.3, −0.02, .85}. What are the equivalent draws from a normal distribution with mean 0.8 and variance 25? Let ui ∼ U(0, 1). Draw 1000 random ui and construct a histogram of the results. What are the mean and standard deviation? Let ui ∼ U (0, 1). Compute _12 i=1 ui − 6, 1000 times. (This will use 12,000 random numbers.) Construct a histogram and compare it to a theoretical standard normal density. What are the mean and standard deviation? (This ...Post your question