It is said (S. Branch Walker) that the Indian who sold Manhattan for $33 was a s
ID: 2780455 • Letter: I
Question
It is said (S. Branch Walker) that the Indian who sold Manhattan for $33 was a sharp salesman. If he had put his $33 away at 5% compounded semiannually, it would now be worth over $6 billion, and he could buy most of the now-improved land back! Assume that this seller invested on January 1, 1701, the $33 he received. (Round your answers to the nearest whole dollar amount and not in millions.)
Required:
Use Excel to determine the balance of the investment as of December 31, 2015, assuming a 5% interest rate compounded semiannually. (Hint: Use the FV function in Excel.)ke
Balance of investment = ?
Use Excel to determine the balance of the investment as of December 31, 2015, assuming an 6% annual interest rate, compounded semiannually. (Hint: Use the FV function in Excel.)
Balance of the investment = ?
What would be the balances for requirements 1 and 2 if interest is compounded quarterly?
Balance of the investment at 5% compounded quarterly = ?
Balance of the investment at 6% annual interest rate, compounded quarterly = ?
Assume that the account consisting of this investment had a balance of $6.5 billion as of December 31, 2015. How much would the total amount be on December 31, 2021, if the annual interest rate is 6%, compounded semiannually?
Total amount = ?
Part (a)It is said (S. Branch Walker) that the Indian who sold Manhattan for $33 was a sharp salesman. If he had put his $33 away at 5% compounded semiannually, it would now be worth over $6 billion, and he could buy most of the now-improved land back! Assume that this seller invested on January 1, 1701, the $33 he received. (Round your answers to the nearest whole dollar amount and not in millions.)
Explanation / Answer
Answer-1 PV 33 Interest Rate 5% Term 315 Compunding period per annum 2 Balance of investment $ 1881,69,459 Answer-2 PV 33 Interest Rate 6% Term 315 Compunding period per annum 2 Balance of investment $ 40361,33,328 Answer-3 PV 33 Interest Rate 5% Term 315 Compunding period per annum 4 Balance of investment $ 2071,35,300 Answer-3 PV 33 Interest Rate 6% Term 315 Compunding period per annum 4 Balance of investment $ 46315,58,714 Answer-4 PV (as on 31-12-2015) 6 Amount in Billion Interest Rate 6% Term 6 Compunding period per annum 2 Balance of investment $ 9 Amount in billion
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