Question

In a 1998 episode of The Simpsons, mogul Monty Burns and Homer Simpson try to buy protec u s. tax evasion and a small island in Cuba with one billi Treasury in 1941. (Homer almost used this bitt in ar vending machine!) How much would have protection and island cost Mr. Burns in 1941 (as opposed to 1998) assuming a 4.5 percent annual in the value of this Cuba deal?
A. $81,352,60
B. $85,013,468
C. $126,338,102
D. $65,281,480
E. $68,219,147

Answer 1

Answer:

The correct answer is $81,352,601 .

Explanation:

According to the scenario, the given data are as follows:

Future Value (FV)= $1,000,000,000

Rate of interest ( R) = 4.50%

Time Period (t)  = 57 years  (1998 -1941)

So, we can find the present value by using the following formula:

PV = FV / (1+R)^t

By putiing the value, we get,

= $1,000,000,000 / (1+4.5%)^57

= $1,000,000,000 / (1+0.045)^57

= $1,000,000,000 / 12.29217

= $81,352,601

Hence, the protection and island cost in 1941 is $81,352,601 .