Question

In 1626, Dutchman Peter Minuit purchased Manhattan Island from a local Native American tribe. Historians estimate that the price he paid for the island was about $24 worth of goods, including beads, trinkets, cloth, kettles, and axe heads. Many people find it laughable that Manhattan Island would be sold for $24, but you need to consider the future value (FV) of that price in more current times. If the $24 purchase price could have been invested at a 4.75% annual interest rate, what is its value as of 2018 (392 years later)?

Answer 1

Answer:

FV = $1,908,058,316

Explanation:

We simply calculate the future value using the future value formula. We take the principle and apply the given interest rate with power being the number of years.

Formula = Principle * (1+r)^t

Where,

• Principle is the Initial amount
• r = interest rate
• t = time

So, FV = 24 * (1+0.0475)^392  = 1908058316