Question

answer with the solution obtained by the Rule of 72 (discussed in Example 2.. 2.19 In 1739, Nader Shah sold the Kohinoor diamond to Queen Victoria for $34. If he saved just $5 from the proceeds in a bank account that paid an 6% ann interest, how much would his descendents have in 2020? want to withdraw $20,000 at the end of two years and $55.000 at the end

answer 2.19

Answer 1

ANSWER:

I = 6%

N = (2020 - 1739) = 281

PV = $5

FV = PV * (1 + I) ^ N = 5 * (1 + 6%) ^ 281 = 5 * (1.06) ^ 281 = 5 * 12,910,650.94 = 64,553,254.69

SO HIS DESCENDENTS WOULD HAVE $64,553,254.69