The trees in Forest F grow such that the volume of timber at time t can be repre
ID: 1253347 • Letter: T
Question
The trees in Forest F grow such that the volume of timber at time t can be represented as f(t) = 900t - 50t2 + 60t3 + 7t4. (Note that these trees do not follow 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 100 Yap pieces of stone (YPS) net of harvest costs. Assume there is no opportunity cost to using the land to grow timber. At t = 89 years from the beginning of the trees' growth, Imhotep obtained sole ownership of the forest through a surprise bequest. What is the marginal benefit Imhotep would get by waiting to cut the trees for another year?Explanation / Answer
The trees in Forest F grow such that the volume of timber at time t can be represented as f(t) = 900t - 50t2 + 60t3 + 7t4. (Note that these trees do not follow 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 100 Yap pieces of stone (YPS) net of harvest costs. Assume there is no opportunity cost to using the land to grow timber. At t = 89 years from the beginning of the trees' growth, Imhotep obtained sole ownership of the forest through a surprise bequest. What is the marginal benefit Imhotep would get by waiting to cut the trees for another year
answer = 2,150,812,300 YPS
P=100
DELTA F(t) =t(90)-t(89)
marginal benefit =100 (502686000-481177877)=2,150,812,300 YPS
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