Explain how much would bill have to pay for manhattan if

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Over the past few years, Microsoft Founder bill gates net worth has fluctuated between 20 billion and 130 billion. In early 2006, it was about 26 billion after he reduced his stake in Microsoft from 21 percent to 14 percent by moving billion into charitable foundation.

a. Manhattan's native tribe sold Manhattan island to peter Minuit for $24 in 1626 . Now 387 years later in 2013, Bill Gates wants to buy the island from the current natives. How much would bill have to pay for Manhattan if the current natives want a 5 percent annual return on the original $24 purchase price ?

b. Bill gates decides to pass on Manhattan and instead plans to buy the city of Seattle, Washington, for 50 billion in 10 years. What would Bill have to invest today at 11 percent compounded annually in order to purchase Seattle in 10 years?

c. Now assume Bill Gates only wants to invest half his net worth today, 13 billion, in order to buy seattle for 50 billion in 10 years. What annual rate of return would he have to earn in order to complete his purchase in 10 years?

d. Instead of buying and running large cities, Bill Gates is considering quitting the rigors of the business world. To fund his retirement bill would invest 20 billion fortune in safe investments with annual rate of 7%. He also wants to make 50 equal annual withdrawals from this retirement fund beginning a year from today, running his retirment fund to 0 at the end of 50 years. How much can his annual withdraw be in this case?

Reference no: EM13468030

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