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Safari File Edit View History Bookmarks Window Help 33% C%), Thu Sep 27 12:37 PM a - ABC E , newconnect.mheducation.com Exam 1 6 Saved Help Save & Exit Submit 2 In 1895, the first Putting Green Championship was held. The winner's prize money was $210. In 2016, the winner's check was $1,410,000. What was the percentage increase per year in the winner's check over this period? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) a. 10727b. If the winner's prize increases at the same rate, what will it be in 2034? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g. 32.16.) a. Increase per year b. Winners prize in 2034 Mc Graw Hill K Prev 2 of 10Next 27

Explanation / Answer

Answer to Part a.

Future Value = Present Value * (1 + r)^ n
$1,410,000 = $210 * (1 + r) ^ 121
r = (1,410,000 / 210) ^ (1/ 121) – 1
r = 1.075544 – 1
r = 0.075544
or r = 7.55%

Answer to Part b.

Future Value = Present Value * (1 + r)^ n
Future Value = $1,410,000 * (1 + 0.0755) ^ 18
Future Value = $1,410,000 * 1.0755 ^18
Future Value = $1,410,000 * 3.7067
Future Value = $5,226,447.00

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