In 1880 five aboriginal trackers were each promised the equivalent of 50 Australian dollars for helping

In 1880 five aboriginal trackers were each promised the equivalent of 50 Australian dollars for helping to capture the notorious outlaw Ned Kelley. In 1996 the granddaughters of two of the trackers claimed that this reward had not been paid. The prime minister stated that if this was true, the government would be happy to pay the $50. However, the granddaughters also claimed that they were entitled to compound interest.

a.	How much was each entitled to if the interest rate was 3%? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Future value

$ 1,542.01

b.	How much was each entitled to if the interest rate was 6%? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Future value

$ 43,097.33

Explanation:

a.

$50 × (1.03)116 = $1,542.01

b.

$50 × (1.06)116 = $43,097.33