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 $10,331,500. Unfortunately for the previous owner, he had purchased it in 2000 at a price of $12,417,500.

What was his annual rate of return on this sculpture? (Negative amount should be indicated by a minus sign. Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e. g., 32.16.)

Question

Business

Lee Perez

3 October, 19:09

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 $10,331,500. Unfortunately for the previous owner, he had purchased it in 2000 at a price of $12,417,500.

What was his annual rate of return on this sculpture? (Negative amount should be indicated by a minus sign. Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e. g., 32.16.)

+1

Answers (1)

Know the Answer?

Todd Fernandez · Answer 1

-5.95%

Explanation:

A = P (1+r) ^n

A is the auction price at which the sculpture was sold = $10,331,500

P is the price the sculpture was purchased = $12,417,500

n is the time interval between the year of sales and year of purchase

10,331,500 = 12,417,500 (1+r) ^3

(1+r) ^3 = 10,331,500/12,417,500

(1+r) ^3 = 0.832

1+r = (0.832) ^1/3

1+r = 0.9405

r = 0.9405 - 1 = - 0.0595 = - 5.95%