GRADED DISCUSSION WEEK 2
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 1900 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 2007 for $17.4 million.” (The Wall Street Journal, August 1,
2014, M2)
In your initial response to the topic you have to answer all 5 questions.
You are expected to make your own contribution in a main topic as well as respond with value
added comments to at least two of your classmates as well as to your instructor.
1.
Calculate the annual compound growth rate of the house price during the period when the
house was owned by Robert G. Goldstein (since 2007). (Round the number of years to the whole
number). Please show your work.
Excel= Formula for Rate.
Nper: 8
PV: -17.4
FV: 28.0
=RATE(8,,-17.4,28)
Rate: 6%
2.
Assume that the growth rate you calculated in question #1 remains the same for the next
20 years. Calculate the price of the house in 20 years.Please show your work.
Excel= Formula for FV
Rate:.06
Nper: 20
PV: -28.0
=FV(0.06,20,,-28)
Property value in 20 years: 89.80 million
3.
Assume the growth rate that you calculated in #1 prevailed since 1900. Calculate the
price of the house in 1900.Please show your work.
4.
Assume the growth rate that you calculated in #1 prevailed since 1900. Which price was
paid for the house in 1964?Please show your work.
5.
You were using the time value of money concept to answer the question #3. Think about
the time line for that problem. What is the time point 0 in that problem? Please explain your
answer.
The time line for #3 would be 107 years. The time point (0) in problem #3 would be the year
1900. In problem #3 we are to find the value of the property in 1900.
