The selling value of pearls (V) derived from sea shells is a continuous function of time (t, in years) as follows:

It is assumed that the continuous interest rate is fixed at 6% per year and there is no cost to cultivate pearl mussels in the sea. Please answer the following questions accordingly:
a. Set the present value function of pearls!
b. When should pearls be harvested in order to generate sale value now (present value) is the highest?
c. Prove that the length of time that you generated in the calculation in point (b) is the most optimal time!
 

Transcribed Image Text:

V = 200,000(1.25) √2 V = 200,000(1.25) √2

Answer rating: 100% (QA)

a Set the present value function of pearls V 200000125t2 PV 200000106t2 b The present value of pearl... View the full answer