In 2012, an Action Comics No. 1, featuring the first appearance of Superman, was

Question

In 2012, an Action Comics No. 1, featuring the first appearance of Superman, was sold at auction for $975,000. The comic book was originally sold in 1940 for $.05.

For this to have been true, what was the annual increase in the value of the comic book? (Round your answer as directed, but do not use rounded numbers in intermediate calculations. Enter your answer as a percent rounded to 2 decimal places (e.g., 32.16).)

In 2012, an Action Comics No. 1, featuring the first appearance of Superman, was sold at auction for $975,000. The comic book was originally sold in 1940 for $.05.

Explanation / Answer

The annual increase in the value of the comic book should be computed using the following formula:

Futre value = Present value × (1 + i)^n

Where,

Futre value = $975,000

Present value = $0.05

n = 72

i = ?

Subsitute the values in the above formula to get the following:

$975,000 = $0.05 × (1 + i)^72

Or,

$975,000/$0.05 = (1+i)^72

Or,

$19,500,000 = (1+i)^72

Or,

$19,500,000^(1/72) = 1+i

Or,

i = [ $19,500,000^(1/72) ] - 1 = 1.26255550 - 1 = 0.2625555

Or,

i = 26.26%

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