Part (a): It is said that the Indian who sold Manhattan for $34 was a sharp salesman. If he had put his $34 away at 5% compounded semiannually, it would now be worth more than $4 billion, and he could buy most of the now-improved land back! Assume that this seller invested on January 1, 1701, the $34 he received. (Enter amounts in whole dollars, not in billions. Round final answers to nearest whole dollar amount.) Required: 1. Use Excel to determine the balance of the investment as of December 31, 2021, assuming a 5% interest rate compounded semiannually. (Hint: Use the FV function in Excel.) 2. Use Excel to determine the balance of the investment as of December 31, 2021, assuming an 6% annual interest rate, compounded semiannually. (Hint: Use the FV function in Excel.) 3. What would be the balances for requirements 1 and 2 if interest is compounded quarterly? 4. Assume that the account consisting of this investment had a balance of $4.5 billion is of December 31, 2021. How much would the total amount be on December 31, 2027, if the annual interest rate is 6%, compounded semiannually?

Part (a): It is said that the Indian who sold Manhattan for $34 was a sharp salesman. If he had put his $34 away at 5% compounded semiannually, it would now be worth more than $4 billion, and he could buy most of the now-improved land back! Assume that this seller invested on January 1, 1701, the $34 he received. (Enter amounts in whole dollars, not in billions. Round final answers to nearest whole dollar amount.) Required: 1. Use Excel to determine the balance of the investment as of December 31, 2021, assuming a 5% interest rate compounded semiannually. (Hint: Use the FV function in Excel.) 2. Use Excel to determine the balance of the investment as of December 31, 2021, assuming an 6% annual interest rate, compounded semiannually. (Hint: Use the FV function in Excel.) 3. What would be the balances for requirements 1 and 2 if interest is compounded quarterly? 4. Assume that the account consisting of this investment had a balance of $4.5 billion is of December 31, 2021. How much would the total amount be on December 31, 2027, if the annual interest rate is 6%, compounded semiannually?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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