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    If Eugene were to sell the statue now, he would acquire 75,000 dollars. If he sold it in one year he would then acquire 80,000 dollars. To maximize his income, he should sell the statue as soon as possible.

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    If Eugene were to sell the statue now, he would acquire 75,000 dollars. If he sold it in one year he would then acquire 80,000 dollars. To maximize his income, he should sell the statue as soon as possible.

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    36 views1 page

    Pow 6 Skill

    Uploaded by

    api-267935456
    If Eugene were to sell the statue now, he would acquire 75,000 dollars. If he sold it in one year he would then acquire 80,000 dollars. To maximize his income, he should sell the statue as soon as possible.

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    Download as PDF, TXT or read online from Scribd
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    of 1

    Step

    Explanation

    AnswerquestionA(WillEugenebebetteroff
    sellingtheobjectnow,orinayearfromnow)

    IfEugeneweretosellthestatuenow,he
    wouldacquire75,000dollars,whereasifhe
    solditinoneyearhewouldthenacquire
    80,000dollars

    TheclearchoiceforEugenetosellitone
    yearfromnow

    NextweneedtoanswerquestionB(Wouldit
    bebetterforEugenetoselltheobjectnowor
    in20years)

    IfEugeneweretowaittwentyyearsbefore
    selling,hisstatuewouldbeworth175,000
    dollars,andifhesolditnowtocollectinterest
    itwouldthenbeworth198,997dollars.

    Theobviouschoiceistocollectinterestby
    sellingitnow,andnotwaitingforalatertime

    Last,weanswerquestionC(Inhowmany
    yearscanEugenesellhisobjecttomaximise
    itsworth)

    Therearemanydifferentvariablesinthis
    equation,andtostartusoffwewilldetermine
    age.IfEugeneisyoungletssayhesellshis
    objectandleavesitinthebankforseventy
    years,andafterthattimehewouldhave
    accumulated2,281,981dollars(whichover4
    timestheamounthewouldhavegottenifhe
    decidednottosell).

    IfEugenedidntsell,andheldontotheobject
    forthose70years,thestatuesworthwould
    havegoneuptoatotalof425,000dollars.

    Afterexactlysevenyears,theinterestinthe
    bankwouldbemakinghimmoreannual
    moneythanleavingthestatuetoraisein
    value,andhedthengainmoneyataquicker
    rateduetothebanksinterest.

    Tomaximizehisincome,heshouldsellthe
    statueassoonaspossible(zeroyears)and
    lethisinterestgrowandhismoneygrowwith
    it!

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