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 = 306,000 + 1,000t²     (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.

When would you advise the dealership to sell the vehicles to maximize their discounted value? (Round your answer to one decimal place.)

Answer 1