In 1895, the first Green Jacket Golf Championship was held. The winner’s prize money was $155. In 2018, the winner’s check was $2,190,000. a. What was the annual percentage increase in the winner’s check over this period? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. If the winner’s prize increases at the same rate, what will it be in 2049? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 1,234,567.89.)

Future Value = Present Value * (1+rate)^n where, n = no. of years (2018-1895) 123 $2,190,000 = $155 *(1+r)^123 $2,19,000 / $155 = (1+r)^123 14129.03 = (1+r)^ 123 (14129.03)^(1/123) = 1+r (14129.03)^ 0.00813 = 1+r 1.080789 = 1+r r =1.080789 -1 r = 0.080789 r = 8.08%Future Value = Present Value * (1+rate)^n where, n = no. of years (2049-2018) 31 Future Value = $2,190,000 * (1.0808)^31 Future Value = $2,190,000 * 11.1200161 Future Value = $24,352,835.28 The annual percentage increase in the winner’s check over this period is 8.08% If the winner’s prize increases at the same rate, it will be $24,352,835.28 in 2049

Answered: In 1895, the first Green Jacket Golf Championship was held. The winner’s prize money was $155. In 2018, the winner’s check was $2,190,000. a. What was the…

Essentials Of Investments

11th Edition

ISBN: 9781260013924

Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher: Mcgraw-hill Education,

See similar textbooks

Concept explainers

Present Value

Present value (PV) is defined as the current or present value of all future sums of cash flow or money at a specified rate of return. This rate of return is known as the discounted rate, which is essentially the interest rate, discounted over some time. …

Question

In 1895, the first Green Jacket Golf Championship was held. The winner’s prize money was $155. In 2018, the winner’s check was $2,190,000.

a.	What was the annual percentage increase in the winner’s check over this period? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
b.	If the winner’s prize increases at the same rate, what will it be in 2049? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 1,234,567.89.)