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iN 1626 Manhattan island was sold for $24. If that money had been invested at 8% per...

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islnds | (Level 1) Valedictorian

Posted July 17, 2013 at 8:52 AM via web

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iN 1626 Manhattan island was sold for $24. If that money had been invested at 8% per annum compounded annuallly what would it have amounted to today?

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jeew-m | College Teacher | (Level 1) Educator Emeritus

Posted July 17, 2013 at 9:44 AM (Answer #1)

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For the compounding interest;

`FV = PV(1+i)^n`

FV = Future Value

PV = Present value

i = effective interest rate per annum

n = number of years

 

` PV = 24`

`i = 8% = 0.08`

`n = (2013-1626) = 387`

 

`FV = 24(1+0.08)^387`

`FV = 2.066xx10^12`

 

So the amount today is `$2.066xx10^12` .

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