Hamptons home of a famed socialite hits the market

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Reference no: EM13747175

1) To what amount will the following investment accumulate? $6,845, invested for 40 years at 4 percent, compounded annually. _________ (Round answer two decimal places)

2) You placed $2,037 in a saving account today that earns an annual interest rate of 9 percent compounded annually. How much you will have in this account at the end of 38 years? Assume that all interest received at the end of the year is reinvested the next year. _________ (Round answer two decimal places)

3) What is the present value of the following future amount? $235,078 to be received in 10 years from now, discounted back to the present at 6 percent, compounded annually. _________ (Round answer two decimal places)

4) How many years will the following take? $978 to grow to $40,200 if invested at 18%, compounded annually. _________ (Round answer two decimal places)

5) Cooling Tools, Inc. is currently producing 1,376 of small refrigerators per month but the company's CEO plans to increase production at a rate of 8.00% per month until the firm is producing 5,884 of refrigerators per month. How many months will this take? _________ (Round answer two decimal places)

6) Upon graduating from college, you make an annual salary of $70,994. You set a goal to double it in the future. If your salary increases at an average annual rate of 5.98%, how long will it take to reach your goal? _________ (Round answer two decimal places)

7) At what annual rate would the following have to be invested? $1,171 to grow to $45,094 in 12 years. _________ (Round answer two decimal places)

8) A firm's dividends have grown over the last several years, 6 years ago the firm paid a dividend of $1. Yesterday it paid a dividend of $5. What was the average growth rate of the dividend for this firm? _________ (Round answer two decimal places)

9) To what amount will the following investment accumulate? $366, invested today for 14 years at 13.40%, compounded monthly. _________ (Round answer two decimal places)

The Hamptons Home of a Famed Socialite Hits the Market

"Before there was Paris Hilton, there was Consuelo Vanderbilt Balsan - a Gilded Age heiress and socialite, re-nowned for her beauty and wealth. Now Ms. Balsan's onetime Hamptons home is slated to hit the market priced at $28 million with Tim Davis of the Corcoran Group.

Located on Ox Pasture Road in Southampton, the shingle-style home was built around 1900 and is known as "Gardenside" or "Cara-Mia". Ms. Balsan, the great-granddaughter of railroad magnate Cornelius Vanderbilt, owned the house until her death in 1964.

According to public records, the estate is owned by Robert G. Goldstein, executive vice president and president of global gaming operations at Las Vegas Sands Corp, and his wife Sheryl, who purchased the house in 2007 for $17.4 million." (The Wall Street Journal, August 1, 2014, M2)

In your initial response to the topic you have to answer all 5 questions.

You are expected to make your own contribution in a main topic.

1. Calculate the annual compound growth rate of the house price during the period when the house was owned by Robert G. Goldstein (since 2007). (Round the number of years to the whole number).

2. Assume that the growth rate you calculated in question #1 remains the same for the next 20 years. Calculate the price of the house in 20 years.

3. Assume the growth rate that you calculated in #1 prevailed since 1900. Calculate the price of the house in 1900.

4. Assume the growth rate that you calculated in #1 prevailed since 1900. Which price was paid for the house in 1964?

5. You were using the time value of money concept to answer the question #3. What is the time point 0 is this problem?

Reference no: EM13747175

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