A bond has a Duration (not Modified) of 4.2 years and is priced at 99.50. Its yield is 3%. How much will its price change if the
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The cars should be rented at $34 per day for a maximum income of $6268 per day.
If the daily rental is increased by $x
<u>Then </u>
Rental: R(x)=(28+x)dollars per car-day
Number of cars rented:
N(x) = (220−6x) and Income: I(x) = (28+x) (220−6x) = 6,610 + 52x−5 dollars/day.
The maximum will be achieved when the derivative of I (x) is zero.
= 52−10x = 0
⇒ x = 5.2
For an even dollar rental amount, and increase of $5/day or $6/day will generate the same income.
So
$28+$5 = $33/day
or
$28+$6 = $34/day
would both be valid answers.
However, $34/day involves renting fewer cars and thus reduced expenses.
Using basic substitution and arithmetic
I(4) = $6,268
<h3>What is Maximum revenue ?</h3>
Maximum revenue is defined as the total maximum amount of revenue of product or service can yield at maximum demand and price.
To calculate maximum revenue, determine the revenue function and then find its maximum value. Write a formula where p equals price and q equals demand, in the number of units.
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