The Hamptons Home of a Famed Socialite Hits the Market “Before there was Paris H

Question

The Hamptons Home of a Famed Socialite Hits the Market

“Before there was Paris Hilton, there was Consuelo Vanderbilt Balsan – a Gilded Age heiress and socialite, re-nowned for her beauty and wealth. Now Ms. Balsan’s onetime Hamptons home is slated to hit the market priced at $28 million with Tim Davis of the Corcoran Group.

Located on Ox Pasture Road in Southampton, the shingle-style home was built around 1900 and is known as “Gardenside” or “Cara-Mia”. Ms. Balsan, the great-granddaughter of railroad magnate Cornelius Vanderbilt, owned the house until her death in 1964.

According to public records, the estate is owned by Robert G. Goldstein, executive vice president and president of global gaming operations at Las Vegas Sands Corp, and his wife Sheryl, who purchased the house in 2007 for $17.4 million.” (The Wall Street Journal, August 1, 2014, M2)

Assume the growth rate of 28% prevailed since 1900. Calculate the price of the house in 1900. Please show your work.

Explanation / Answer

price of the house in 1900 :

By calculation PVAF(28% , 107years) , we can calculate the price of house in 1900

current price of house * PVAF(28% , 107years) = present value

  current price of house = present value / PVAF(28% , 107years)

current price of house = 17400000 / 58.738

= $ 296230.72

Note ; PVAF(28% , 107years) = PVAF for 30 years = 3.569

for another 30 years = 3.569 * 3.569

for anothe 30 years = 3.569 * 3.569 * 3.569

after 90 years = 45.461

for another 17 years = 58.738 (after 107 years)  

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