Question

Check my work Part (a): It is said that the Indian who sold Manhattan for $40 was a sharp salesman. If he had put his $40 away at 5% compounded semiannually, it would now be worth more than $7 billion, and he could buy most of the now-improved land back! Assume that this seller invested on January 1, 1701, the $40 he received. (Enter amounts in whole dollars, not in billions. Round final answers to nearest whole dollar amount.) 0.25 points eBook References Required: 1. Use Excel to determine the balance of the investment as of December 31, 2018, assuming a 5% interest rate compounded semiannually. (Hint. Use the FV function in Excel.) 2. Use Excel to determine the balance of the investment as of December 31, 2018, assuming an 6% annual interest rate, compounded semiannually. (Hint. Use the FV function in Excel.) 3. What would be the balances for requirements 1 and 2 if interest is compounded quarterly? 4. Assume that the account consisting of this investment had a balance of $7.5 billion as of December 31, 2018. How much would the total amount be on December 31, 2024, if the annual interest rate is 6%, compounded semiannually?

Answer 1

fx B2 а1 В C D E 1 $264,507,737 balance of the investment 2 al 3 $5,841,641,539 balance of the investment 4 а2 5 balance of the аз 6 investment 5% interest rate compounded quarterly 6% annual interest rate,compounded quarterly $291,434,224 7 $6,712,213,043 $10,693,206,651 total amount 10 a4 11 12 $188,243,200 b1 13 present value 14 $201,402,000 b2 15 present value 16 present value $118,593,216 b3 17 18 note-the table factors in part (b) have been rounded to 3 decimal places. 19 20 A st LO LON

for formulas and calculations, refer to the image below -

B2 a1 В A C D Е 1 -FV(5%/2,318*2,0,40) 2 balance of the investment al 3 -FV(6% / 2,318*2,0,40) balance of the investment 5 balance of the investment аз 6 -FV(5% /4,318 4,0,40) 6% annual interest rate,compounded quarterly-FV(6%/4,318*4,0,40) 5% interest rate compounded quarterly 7 8 --FV(6%/2,6*2,0, 7500000000) total amount 10 a4 11 12 b1 7.024*26800000 13 present value 14 = 7.515*26800000 b2. 15 present value 16 D13*(1-0.37) bз 17 present value 18 note-the table factors in part (b) have been rounded to 3 decimal places. 19 20 . 2 Ln

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