Question

The Hamptons Home of a Famed Socialite Hits the Market “Before there was Paris Hilton, there was Consuelo Vanderbilt Balsan – a Gilded Age heiress and socialite, re-nowned for her beauty and wealth. Now Ms. Balsan’s onetime Hamptons home is slated to hit the market priced at $28 million with Tim Davis of the Corcoran Group. Located on Ox Pasture Road in Southampton, the shingle-style home was built around 1910 and is known as “Gardenside” or “Cara-Mia”. Ms. Balsan, the great-granddaughter of railroad magnate Cornelius Vanderbilt, owned the house until her death in 1964. According to public records, the estate is owned by Robert G. Goldstein, executive vice president and president of global gaming operations at Las Vegas Sands Corp, and his wife Sheryl, who purchased the house in 2003 for $17.4 million.” (The Wall Street Journal, August 1, 2014, M2)

1. Calculate the annual compound growth rate of the house price during the period when the house was owned by Robert G. Goldstein (since 2003). (Round the number of years to the whole number). Please show your work.

3. Assume that the growth rate you calculated in question #1 remains the same since the house was sold. Calculate the price of the house today. (Round the number of years to the whole number). Please show your work.

Answer 1