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. Which price was paid for the house in 1964? Please show your work.

Explanation / Answer

Future value of an amount is given by Principal x ( 1 + rate) to the power of number of terms

Amount = 17.4 million, rate = 28 % term = 2007-1964 = 43 years

By substituting in the formula

17,400,000 = A x ( 1 + 28% ) ^ 43

By solving it we get A = $427.0911

Thus the price paid for the house in 1964 assuming a growth rate of 28% is $ 427.0911

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.