I need help with answering this question Can we compare the differences between assuming 15 years and assuming 11 years? How big of a difference, if any, does this make? (questions for anyone)

Here is the question:

Before there was Paris Hilton, there was Consuelo Vanderbilt Balsan a Gilded Age heiress and socialite, re-nowned for her beauty and wealth. Now Ms. Balsans onetime Hamptons home is slated to hit the market priced at $28 million with Tim Davis of the Corcoran Group.

Located on Ox Pasture Road in Southampton, the shingle-style home was built around 1910 and is known as Gardenside or Cara-Mia. Ms. Balsan, the great-granddaughter of railroad magnate Cornelius Vanderbilt, owned the house until her death in 1964.

According to public records, the estate is owned by Robert G. Goldstein, executive vice president and president of global gaming operations at Las Vegas Sands Corp, and his wife Sheryl, who purchased the house in 2003 for $17.4 million. (The Wall Street Journal, August 1, 2014, M2)

In your initial response to the topic you have to answer all 5 questions.

You are expected to make your own contribution in a main topic as well as respond with value added comments to at least two of your classmates as well as to your instructor.

Calculate the annual compound growth rate of the house price during the period when the house was owned by Robert G. Goldstein (since 2003). (Round the number of years to the whole number). Please show your work.

Assume that the growth rate you calculated in question #1 remains the same for the next 30 years. Calculate the price of the house in 30 years after it was sold by Robert G. Goldstein. Please show your work.

Assume that the growth rate you calculated in question #1 remains the same since the house was sold. Calculate the price of the house today. (Round the number of years to the whole number). Please show your work.

Assume the growth rate that you calculated in #1 prevailed since 1910. Calculate the price of the house in 1910. Please show your work.

Assume the growth rate that you calculated in #1 prevailed since 1910. Which price was paid for the house in 1964? Please show your work.

Assume the growth rate that you calculated in #1 prevailed since 1964. Calculate the price of the house in 2000. Please show your work.

You were using the time value of money concept to answer the question #6. Think about the time line for that problem. What is the time point 0 in that problem? Please explain your answer.

Here is my answer: Solution:

Number of years = 2014 2003 = 11

Compound Annual growth rate = (Ending value/beginning value)^(1/n) 1

Compound annual growth rate = (28,000,000/17,400,000)^(1/11)-1

Compound annual growth rate = 4.42%

2. Price of house in 30 years = $28,000,000 (1 + 4.42%)^30

Price of house in 30 years = $102,479,390

3. In 2003 price = $17,400,000

Number of years = 2003 1910 = 93

Price of house in 1910 = $17,400,000/(1.0442)^93

Price of house in 1910 = $311,649

4. In 2003 price = $17,400,000

Number of years = 2003 1910 = 93

Price of house in 1910 = $17,400,000/(1.0442)^93

Price of house in 1910 = $311,649

5. Number of years = 1964 1910 = 54

Price of house in 1964 = $311,649 (1.0442)^54

Price of house in 1964 = $3,220,960

6. Number of years = 2000 1964 = 36

Price of house in 2000 = $3,220,960 (1.0442)^36

Price of house in 2000 = $15,282,633

7. In this case, the time point 0 is 1964, we have discounted value from 2000 to 1964. Hence, the point 0 is 1964.