In 1895, the first U.S. Open Golf Championship was held. The winner’s prize money was $150. In 2016, the winner’s check was $2.3 million. What was the percentage increase per year in the winner’s check over this period?
In 1895, the first U.S. Open Golf Championship was held. The winner’s prize money was $150. In 2016, the winner’s check was $2.3 million. What was the percentage increase per year in the winner’s check over this period?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
In 1895, the first U.S. Open Golf Championship was held. The winner’s prize money was $150. In 2016, the winner’s check was $2.3 million.
What was the percentage increase per year in the winner’s check over this period?
Expert Solution
Step 1
Compounded Annual Growth Rate:
If an investment is growing or increases at a compounded interest rate over some time, then we can compute the annual growth rate utilizing the below formula.
A = P(1+i/100)n
Where,
A is the future value
P is the present value
i is the rate of interest
n is the time.
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