(Solved): 1. The value of land bought for speculation is an increasing function of time according to followi ...

1. The value of land bought for speculation is an increasing function of time according to following equation \( V(t)=2000 e^{2 e^{2}} \cdot V(t) \) is the value of the land at time \( t \) in million rupiah units. Assuming that the land owner is maximizing the present value of the land, \( A(t) \), and the continous interest rate is 10 percent per annum. a. How long should the land be held to maximize its present value? [ 6 points] b. Show that sufficient condition for maximization is satisfied [5 points] c. If interest rate decreses to 5 percent per annum, what is the optimal time of the land? [4 points] d. What can you conclude about the effect of interest rate decrease to present value of the land? [4 points]