1. Assume that in January 2010, the average house price in a particular area was
ID: 2636907 • Letter: 1
Question
1. Assume that in January 2010, the average house price in a particular area was $287,400. In January 2001, the average price was $204,300.
What was the annual increase in selling price? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))
2. Your coin collection contains 43 1952 silver dollars. If your grandparents purchased them for their face value when they were new, how much will your collection be worth when you retire in 2053, assuming they appreciate at a 5.8 percent annual rate? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))
3. Although appealing to more refined tastes, art as a collectible has not always performed so profitably. During 2003, an auction house sold a sculpture at auction for a price of $10,321,500. Unfortunately for the previous owner, he had purchased it in 1998 at a price of $12,397,500.
What was his annual rate of return on this sculpture? (Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))
1. Assume that in January 2010, the average house price in a particular area was $287,400. In January 2001, the average price was $204,300.
What was the annual increase in selling price? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))
2. Your coin collection contains 43 1952 silver dollars. If your grandparents purchased them for their face value when they were new, how much will your collection be worth when you retire in 2053, assuming they appreciate at a 5.8 percent annual rate? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))
Explanation / Answer
1.
Annual increase in selling price = (287400/204300) ^ (1/9) -1 =1.038649-1= 3.8649%
2.
Collection worth in 2053(100 years)=43*(1.058^101)=12779.71
3.
Annual rate of return =(10321500/12397500)^(1/5)-1 =-0.03599 =-3.6% per annum
Or loss of 3.6% per annum
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