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Math Help - Asset appreciation question.

  1. #1
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    Asset appreciation question.

    As the financial consultant to a classic auto dealership, you estimate that the total value (in dollars) of its collection of 1959 Chevrolets and Fords is given by the formula

    v = 305,000 + 970t^2 (t ≥ 5)

    where t is the number of years from now. You anticipate a continuous inflation rate of 5% per year, so that the discounted (present) value of an item that will be worth $v in t years' time is

    p = ve^−0.05t.
    How many years from now would you advise the dealership to sell the vehicles to maximize their discounted value?

    Thank you.
    Last edited by mr fantastic; November 18th 2011 at 09:38 PM. Reason: Title.
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  2. #2
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    Re: Please help with an asset appreciation question.

    So p= (305000+ 970t^2)e^{-.05t}
    Differentiate p with respect to t, set the derivative equal to 0, and solve for t.
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  3. #3
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    Re: Please help with an asset appreciation question.

    Thank you for the help! I figured it out .
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