In 2013 Bill Gates had a private wealth of about $28 billion after he reduced his...
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In 2013 Bill Gates had a private wealth of about $28 billion after he reduced his stake in Microsoft from 21% to around 14% by moving billions into his charitable foundation. Let's see what Bill Gates can do with his money in the following problems. a. I'll take Manhattan? Manhattan's native tribe sold Manhattan Island to Peter Minuit for $24 in 1626. Now, 387 years later in 2013, Bill Gates wants to buy the island from the "current natives." How much would Bill have to pay for Manhattan if the current natives" want a 6% annual return on the original $24 purchase price? Could he afford it? (5 points) b. How much would Bill have to pay for Manhattan if the "current natives want a 6% return compounded monthly on the original $24 purchase price? (5 points) C. Microsoft Seattle? Bill Gates decides to pass on Manhattan and instead plans to buy the city of Seattle, Washington, for $60 billion in 10 years. How much would Mr. Gates have to invest today at 10 percent compounded annually in order to purchase Seattle in 10 years? (5 points) d. Now assume Bill Gates wants to invest only about half his net worth today, $14 billion, in order to buy Seattle for $60 billion in 10 years. What annual rate of return would he have to earn in order to complete his purchase in 10 years? (5 points) In 2013 Bill Gates had a private wealth of about $28 billion after he reduced his stake in Microsoft from 21% to around 14% by moving billions into his charitable foundation. Let's see what Bill Gates can do with his money in the following problems. a. I'll take Manhattan? Manhattan's native tribe sold Manhattan Island to Peter Minuit for $24 in 1626. Now, 387 years later in 2013, Bill Gates wants to buy the island from the "current natives." How much would Bill have to pay for Manhattan if the current natives" want a 6% annual return on the original $24 purchase price? Could he afford it? (5 points) b. How much would Bill have to pay for Manhattan if the "current natives want a 6% return compounded monthly on the original $24 purchase price? (5 points) C. Microsoft Seattle? Bill Gates decides to pass on Manhattan and instead plans to buy the city of Seattle, Washington, for $60 billion in 10 years. How much would Mr. Gates have to invest today at 10 percent compounded annually in order to purchase Seattle in 10 years? (5 points) d. Now assume Bill Gates wants to invest only about half his net worth today, $14 billion, in order to buy Seattle for $60 billion in 10 years. What annual rate of return would he have to earn in order to complete his purchase in 10 years? (5 points)
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Future Value FV P1rmnm Present Value PV F1rmnm Where ... View the full answer
Related Book For
Foundations of Finance The Logic and Practice of Financial Management
ISBN: 978-0132994873
8th edition
Authors: Arthur J. Keown, John D. Martin, J. William Petty
Posted Date:
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