1. In 1880 an aboriginal tracker was promised the equivalent of 100 Australian d
ID: 2818143 • Letter: 1
Question
1. In 1880 an aboriginal tracker was promised the equivalent of 100 Australian dollars for helping to capture a notorious outlaw. In 1993 the granddaughter of the tracker claimed that this reward had not been paid. The prime minister stated that if this was true, the government would be happy to pay the $100. However, the granddaughter claimed that she was entitled to compound interest for the 113 years. How much was she entitled to if the interest rate was 5 percent? What if the rate of interest were 10% ?
Explanation / Answer
We use the formula:
A=P(1+r/100)^n
where
A=future value
P=present value
r=rate of interest
n=time period.
Hence
1.A=$100*(1.05)^113
=$100*247.9652341
which is equal to
=$24,796.52(Approx).
2.A=$100*(1.1)^113
=$100*47574.4113
which is equal to
=$4,757,441.13(Approx).
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.