Some estimate the (2012) current value of Manhattan to be about $800,000,000,000. Assuming this to be true, what would have been a fair price for Peter Minuit to pay for Manhattan in 1626, assuming an interest rate of 5% compounded annually

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2014-09-10T12:48:00+05:30

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Price for Peter in 1626 = P
Interest = r = 5%
Number of years = 2012 - 1626 = 386 years
number of times interest is compounded = n = 386

Accumulated Amount in 2012

= P ( 1 + \frac{r}{100} )^n = P (1+5/100)^{386} = P \ 1.05^{386} = 151032162.59 P \\ \\ So\ Cost\ of Manhattan\ in\ 2012\ = \$ 800,000,000,000 = 151032162.59 P \\ \\ P = \frac{\$ 800,000,000,000}{151032162.59} = \$ 5296.89 \\ \\



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