Given that in
1880 five aboriginal trackers were each promised the equivalent of 100
australian dollars for helping to capture the notorious outlaw ned
kelley. in 1993 the granddaughters of two of the trackers claimed that
this reward had not been paid. the victorian prime minister stated that
if this was true, the government would be happy to pay the $100.
however, the granddaughters also claimed that they were entitled to
compound interest.
number of years = 1993 - 1880 = 113 years
initial value = $100
Part A:
If the interest is 4%, then the amount to be paid is given by:
[tex]Amount=100(1+0.04)^{113} \\ \\ =100(1.04)^{113}=100(84.0945) \\ \\ =\$8,409.45[/tex]
Part B:
If the interest is 8%, then the amount to be paid is given by:
[tex]Amount=100(1+0.08)^{113} \\ \\ =100(1.08)^{113}=100(1,582.5229) \\ \\ =\$598,252.29[/tex]
