A common myth asserts that the Dutch settlers purchased Manhattan Island for $24 in 1626 from the aboriginal people. If that $24 were invested in 1626 at the current interest rate of 7% per annum, what would be the approximate value of that investment today?
A) $13 trillion B). $1.3 trillion C). $13 billion D) $1.3 billion
Answer: $24 compounded at 7% annually after 400 years accumulates to $24(1.07)400 or about $1.36•1013 or $13.6 trillion dollars. Therefore answer A is the correct answer.
