Suppose you have inherited an antique whose current market value is $500. Let us assume that...

 

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Suppose you have inherited an antique whose current market value is $500. Let us assume that the market value will increase steadily at a rate of $100 per annum, and that interest on a bank deposit will be compounded continuously at the equivalent annual rate of 5%. Write down the expression for the present value of the amount realised by selling the antique after t years, and determine the optimum time to sell (assuming you can find someone to buy it then, at the market value.) Suppose you have inherited an antique whose current market value is $500. Let us assume that the market value will increase steadily at a rate of $100 per annum, and that interest on a bank deposit will be compounded continuously at the equivalent annual rate of 5%. Write down the expression for the present value of the amount realised by selling the antique after t years, and determine the optimum time to sell (assuming you can find someone to buy it then, at the market value.)

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where n t number of years r annual rate of interest 5 Now future value after time t as the value inc... View the full answer