An oil company discovered an oil reserve of 120 million
barrels. For time , in years, the company's extraction
plan is a linear declining function of time as follows:
where is the rate of extraction of oil in millions of barrels per
year at time and and .
(a)
How long does it take to exhaust the entire reserve?
time = years
(b)
The oil price is a constant 45 dollars per barrel, the extraction
cost per barrel is a constant 20 dollars, and the market interest
rate is 10 percent per year, compounded continuously. What is the
present value of the company's profit?
value = millions of dollars
You can earn partial credit on this problem.