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In 1626, Peter Minuit of the Dutch West India Company paid $24 to purchase Manhattan Island in New York. In retrospect, if Mr Minuit had invested the $24 in a savings account that earned 10% interest, how much would it be worth in 2014? Calculate using:

a. Simple interest
b. Compound interest

Respuesta :

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Answer:

a. $955.20

b. $2.7579 x 10¹⁷

Explanation:

a. Simple interest

The value in 2014 of the investment at a 10% simple interest rate is:

[tex]S= \$24 + \$24*0.10*(2014-1626)\\S=\$955.20[/tex]

b. Compound interest

The value in 2014 of the investment at a 10% compound interest rate is:

[tex]C= \$24(1.10)^{(2014-1626)}\\C=\$2.7579*10^{17}[/tex]

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