What is the value of the alaska purchase

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Reference no: EM131985852

The United States purchased Alaska in 1867 for $7.2M (where M stands for million). Assume that federal tax revenue from the state of Alaska (net federal expenditures) will be $50M in 2014 and that tax revenue started in 1868 and has steadily increased by 3% annually since then. Assume that the cost of capital (or interest rate) is 7%. What is the value of the Alaska purchase at 2014 (rounding to the nearest million)?

Reference no: EM131985852

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