Question

In 1626, peter Minuit purchased manhattan island from the Native Americans for $24 worth of trinkets and beads. Find what the $24 would be worth in the year 2014 if it had been deposited in a bank paying 5% interest compounded quarterly. (Round to the nearest dollar)

Answer 1

$24 would be worth $5666315207

Explanation:

Given amount invested(principal) = $24

rate of interest = 5% = 0.05

Time period = 2014 - 1626= 388

compounded quarterly so n= 4

Apply compound interest formula

`A=P(1+(r)/(n))^(t*n)`

Plug in the values in the formula

`A =24(1+(0.05)/(4))^(388*4)`

`A =24(1+0.0125)^(1552)`

A = 5666315206.95264

A = $5666315207