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The winner of the first annual Tom Morris Golf Invitational won $155 in the competition which...

The winner of the first annual Tom Morris Golf Invitational won $155 in the competition which was held in 1909. In 2015, the winner received $1,560,000. If the winner's purse continues to increase at the same interest rate, how much will the winner receive in 2043? A. $17,801,890.25 B. $16,432,514.07 C. $ 16,183,536.59 D. $20,027,126.53 E. $14,241,512.20

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Answer #1

Winning in 1909 = $155
Winning in 2015 = $1,560,000

Interest Rate = (Winning in 2015 / Winning in 1909)^(1 / Period) - 1
Interest Rate = ($1,560,000 / $155)^(1/106) - 1
Interest Rate = 10,064.51613^(1/106) - 1
Interest Rate = 1.090843 - 1
Interest Rate = 0.090843 or 9.0843%

Winning in 2043 = Winning in 2015 * (1 + Interest Rate)^Period
Winning in 2043 = $1,560,000 * 1.090843^28
Winning in 2043 = $1,560,000 * 11.4115063
Winning in 2043 = $17,801,890.25

Winner will get $17,801,890.25 in 2043

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