In 1895. the first Putting Green Championship was held. The winner?s prize money

Question

In 1895. the first Putting Green Championship was held. The winner?s prize money was $190. In 2010. the winner?s check was $1.390.000. What was the percentage increase per year in the winner?s check over this period? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16)) Interest rate If the winner?s prize increases at the same rate. what will it be in 2036? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16)) Future value $

Explanation / Answer

1) Percentage increase in winner check

Interest Rate =(1390000/190)^(1/115)-1

Interest Rate =8.04% per year

2)

Future Value= winner price in 2010*(1+0.0804)^26

Future Value= 1390000*(1+0.0804)^26

Future Value=$10,380,392.22

Note: if intermediate is no rounding even in interest rate than answer would be:

Future Value= winner price in 2010*(1+0.0804440229)^26

Future Value= 1390000*(1+0.0804440229)^26

Future Value=$10,391,395.01

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