Answered

Item7 1.25 points Return to questionItem 7Item 7 1.25 points In 1898, the first Green Jacket Golf Championship was held. The winner’s prize money was $230. In 2018, the winner’s check was $2,640,000. a. What was the annual percentage increase in the winner’s check over this period? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. If the winner’s prize increases at the same rate, what will it be in 2056? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 1,234,567.89.)

Answer :

Parrain

Answer:

a. 8.10%

b.  $50,930,776.45

Explanation:

a. The 2018 prize money can be expressed as a compounded amount of the 1898 amount in the manner;

2,640,000 = 230 * ( 1 + rate) ^ 120 years

Year 2018 - 1898 = 120 years

Solving for rate;

2,640,000/230 =  ( 1 + rate) ^ 120 years

( 1 + rate) = (2,640,000/230) ^ 1/120

1 + rate = 1.081016

rate = 0.0810

= 8.10%

b. Number of periods = 2056 - 2018

= 38 years

= 2,640,000 * ( 1 + 8.10%) ^ 38

= $50,930,776.45

Other Questions