Dynamic Cash Flow Homework - Engineering Economy | ISYE 6225, Assignments of Systems Engineering

Download Dynamic Cash Flow Homework - Engineering Economy | ISYE 6225 and more Assignments Systems Engineering in PDF only on Docsity! Dynamic Cash Flow Homework (Chapter 5) 1. Problem 5.7. 2. Problem 5.9. 3. Consider the infinite horizon gold mining problem when the profit flow c(x, z) is given by (x –z)z instead of gz – 500z2 /x. Let d denote the one-period discount factor. As before, let V(x) denote the optimal value function and z(x) denote the optimal production quantity or policy. a. Write down the Bellman equation. b. Explain why V(x) cannot be linear. c. Determine V(x) when d = 0. d. Use the method of successive approximations to determine the functional form of V(x) and z(x). e. Given the functional form for V(x), determine the exact value function and optimal policy function. Assume d = 1/1.1. (Simplest to use successive approximations. It is possible to solve algebraically and render closed-form solutions.)