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? $3.6 billion $13.6 trillion $2,030 $10,272

Answer 1

Answer:

The correct choice from given options is "$13.6 trillion".

Explanation:

Native Americans sold the island of Manhattan about 400 years ago for $24

n = number of years = 400

Amount spent on island = $24

Interest rate of invested amount = 7 percent per year

r = 7% = 0.07

cost today  = ?

By using the formula;

Cost today= (1+r)ⁿ x Amount spent on island

= (1+0.07)⁴⁰⁰ x $24

= $13.6 trillion