In 1803, the United States bought a huge tract of land from France for $0.03 cen

Question

In 1803, the United States bought a huge tract of land from France for $0.03 cents per acre. This was called the Louisiana Purchase. Let's assume that the value of that land today is on average $57,000 per acre. What is the rate of return of the purchase? In 1803, the United States bought a huge tract of land from France for $0.03 cents per acre. This was called the Louisiana Purchase. Let's assume that the value of that land today is on average $57,000 per acre. What is the rate of return of the purchase?

Explanation / Answer

No of years=2017-1803=214 years

And we know amount=P(1+r)t

5700000=0.03(1+r)214

(1+r)214=190000000

1+r=1.093

Thus r=0.093 which is 9.3%

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