Question

According to an old myth, native americans sold the island of manhattan about 400 years ago for $24. if they had invested this amount at an interest rate of 7 percent per year, approximately how much would they have had today? A) $3.6 billion B) $13.6 trillion C) $2,030 D) $10,272

Answer 1

Answer:

option (B)  $13.6 trillion

Explanation:

Data provided in the question:

Time period = 400 years

Initial amount or the Principle amount = $24

Annual interest rate = 7%

Now,

Using the compounding formula, we have

Future value = Principal × ( 1 + rate )ⁿ

here, n is the time period

thus,

Future value = $24 × ( 1 + 0.07)⁴⁰⁰

or

Future value = $24 × 566,906,026,887.238

or

Future value = 13,605,744,645,293.71

also,

we know 1 trillion = 10¹²

therefore,

we get

Future value = $13.6 × 10¹² = $13.6 trillion

Hence,

The correct answer is option (B)  $13.6 trillion