refined tastes, art a 8. Calculating Rates of Return Although appealing to more

Question

refined tastes, art a 8. Calculating Rates of Return Although appealing to more collectible has not always performed so profitably. During 2010, Dutscher sold Arkie under the Shower, a painting by renowned Australian painter Bret at auction for a price of S1.100,00. Unfortunately for the previous owner he bi purchased it three years earlier at a price of $1,680,000. What was his ann return on this painting? 9. Perpetuities An investor purchasing a British consol is entitled to receive anma payments from the British government forever. What is the price of a consol that pay

Explanation / Answer

Annual rate of return = (1,100,000/1,680,000)^1/3 - 1

annual rate of return = -13.17%

value of the console = 125/0.039 = 3,205.13

10. Future value = Present value * e^rt

a. 5,594.89

b. 2,834.47

c. 4,445.33

d. 4,673.25

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