Intermediate Microeconomics and Its Application 12th Edition by Walter Nicholson,Christopher Snyder

Exercise 26

Scotch whisky increases in value as it ages, at least up to a point. For any period of time, t, the value of a barrel is given by V =100t-6t 2. This function implies that the proportional rate of
growth of the value of the scotch is (100-12t)/V.
a. Graph this scotch value function.
b. At what value of t is the barrel of scotch most valuable?
c. If the real interest rate is 5 percent, when should this distiller bottle the scotch for immediate sale?
d. How would the distiller's decision change if the real interest rate were 10 percent? (Hint: You will have to use the quadratic equation to solve part d here.)