Question

There is much folklore regarding Peter Minuit's purchase of Mahattan Island in 1626 from a Native American tribe.let's assume that his purchase price was as often mentioned, 24 US dollars. if that amount were placed in an account paying 5% annual interest and allowed to compound annually until 2015, how much would be in the account?

Answer 1

Principal Amount = P = $ 24
Interest rate = 5 % per annum    So  r = 5
Number of years of deposit = 2015 - 1626 = 389 years
Interest is compounded annually.
So number of times interest is compounded = n = 389

Amount that would accumulate to, in the account, in 2015:

$= P ( 1 + \frac{r}{100} ) ^ n = \ 24 (1 + 5/100)^{389} = \ 24 * 1.05^{389} = \ 24* 1.748 * 10^8 \\ \\ = \ 4, 196, 126, 573.31 \\ \\ 4 Billion\ 196\ million\ 126\ thousand\ 573\ dollars\ and\ 31\ cents.$