Wednesday, January 29, 2020
Sale Transaction Essay Example for Free
Sale Transaction Essay Scholarly accounts narrate of a sale transaction between the early 17th century Dutch settlers in Manhattan (Island Manhattes then) and the Indians occupying the island. In the article written by Francis (n.d.), the sale transaction took place in August 10, 1626 (381 years ago), and amounted to 60 guilders (E.B. OCallaghan, ed. 1856 Documents Relative to the Colonial History of the State of New York. Albany. Vol. 1, p. 37, as reported in Francis, n.d.). The payment was actually in beads and trinkets but was assumed to amount to 60 guilders. An article in The Straight Dope and a paper presentation of Banner (2001) estimated 60 guilders to be around $24 based on the times currency exchange rate. The question is to compute how much that money is worth today had that amount been deposited in a Savings and Loan organization, and earned 5% rate compounded quarterly. Compound interest formula: M = P (1 + i) ^ n where M is the final amount including the principal (unknown), P is the principal amount ($24), i is the rate of interest per year (5%), and n is the number of years invested (381). Since the interest is to be compounded quarterly, i will be changed to 1.25% (per quarter), and n will be changed to 1,524 (quarters in 381 years). Hence,     M   = P (1 + i) ^ n            = $24 (1 + 1.25%) ^ 1,524.            = $4,001,656,783.35 à the present amount of $24 in 1626 given the above conditions.            If the same amount of money will be deposited continuously in the same amount of time (i.e., present + 381 years or 1,524 more quarters – this is the year 2388), the new given would be:     M   = P (1 + i) ^ n            = $24 (1 + 1.25%) ^ 3,048.            = $ 667,219,042,156,319,000.00 à the year 2388 amount of $24 in 1626 given the above. References: Banner, S. 2001. Manhattan for $24: American Indian Land Sales, 1607-1763 (Paper presentation at the John M. Olin Center for Law Economics, The University of Michigan). http://www.law.umich.edu/CentersAndPrograms/olin/papers/Fall%202001/banner.PDF. Date accessed: September 24, 2007. Francis, P., n.d. Beads and Manhattan. http://www.hartford-hwp.com/archives/41/415.html. Date accessed: September 24, 2007. Personal Finance Advice, 2006. Compound Interest, Manhattan the Indians. http://www.pfadvice.com/2006/01/15/compound-interest-manhattan-the-indians/. Date accessed: September 24, 2007.
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