For time t > 0, in years, the company’s extraction plan is a linear declining function of time as follows:
,
where q(t) is the rate of extraction of oil in millions of barrels per year at time t and b = 0.1 and a = 10.
(a) If it takes 10.6 years to exhaust the reserve and the oil price is a constant $20 per barrel, the extraction cost per barrel is a constant $10, and the market interest rate is 10% per year, compounded continuously. What is the present value of the company’s profit?
2007-10-19
16:17:37
·
3 answers
·
asked by
fijiprize
1