Otheroriginal Dutch settlers in the New York area wanted to buy the island of Manhattan from the Native American Indians the deal was done for about $24 when people hear that they say well Indians kind of got taken because it's very primeland and great natural harbors and all of that the Indians had investment manager who was going to take this $24 and invest and let's say the guy wasn't that great but could do maybe 7% a year if you get a 7% return there is something known as the rule of 72 so at 7 will take 10 years to so the $24 will become $48 and 1636 and $96 and 1646 if you compounded at 7% a year for 100 years you would have 1,000 times what you started with so $24 will become $24,000 by 1726 it will become $24 million that's $1 1826 and then we go another 100 years you are at $24 billion in 192 6 and then you go another 100
Questionerin 192 6 and then you go another 100in 192 6 and then you go another 100 years 2026 and you're at $24 trillion soyears 2026 and you're at $24 trillion soyears 2026 and you're at $24 trillion so what's the island of Manhattan worth ifwhat's the island of Manhattan worth ifwhat's the island of Manhattan worth if you look at land values in manhan andyou look at land values in manhan andyou look at land values in manhan and extrapolated out today you would get toextrapolated out today you would get toextrapolated out today you would get to 300 million and there's another way to300 million and there's another way to300 million and there's another way to kind of do this Manhattan is about 626kind of do this Manhattan is about 626kind of do this Manhattan is about 626 square miles this works out to somethingsquare miles this works out to somethingsquare miles this works out to something like 32,000 square foot today if youlike 32,000 square foot today if youlike 32,000 square foot today if you were buying pretty Prime land inwere buying pretty Prime land inwere buying pretty Prime land in Manhattan you pay about $1,000 a squareManhattan you pay about $1,000 a squareManhattan you pay about $1,000 a square foot for it the Indians got overpaid atfoot for it the Indians got overpaid atfoot for it the Indians got overpaid at $24 I s says that compounding is the$24 I s says that compounding is the$24 I s says that compounding is the eight wonder of the world the reasoneight wonder of the world the reasoneight wonder of the world the reason it's the eight wonder of the world isit's the eight wonder of the world isit's the eight wonder of the world is that we are not used to thinkingthat we are not used to thinkingthat we are not used to thinking exponentially so there are threeexponentially so there are threeexponentially so there are three variables right which are interplayingvariables right which are interplayingvariables right which are interplaying with each other there is the rate ofwith each other there is the rate ofwith each other there is the rate of compounding there is the length of thecompounding there is the length of thecompounding there is the length of the runway and there is the starting amountrunway and there is the starting amountrunway and there is the starting amount the amount you start with and you canthe amount you start with and you canthe amount you start with and you can actually massage these three if you know actually massage these three if you know actually massage these three if you know the INF you know how long it takes andthe INF you know how long it takes andthe INF you know how long it takes and if you know the period you can figureif you know the period you can figureif you know the period you can figure out what the effective compounding rateout what the effective compounding rateout what the effective compounding rate should be