Question

In 1893, the first Green Jacket Golf Championship was held. The winner's prize money was $230. In 2015, the winner's check was $1,570,000. What was the annual percentage increase in the winner's check over this period?

Answer 1

The interest rate is 7.5%

Explanation:

The winner’s prize was in 1893 = $230

Now the winner prize in 2015 = $1570000

Total time period = 2015 – 1893 = 122 years

We have given the initial prize and final price along with the time period of 122 years. Now interest rate is required to calculate.

Future value = present value (1 + r)^n

1570000 = 230 (1 + r)^122

r = 0.075 or 7.5 %

The interest rate is 7.5%