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28 October, 21:29

A famous painting was sold in 1947 for $21 comma 320. In 1998 the painting was sold for $32.1 million. What rate of interest compounded continuously did this investment earn?

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  1. 28 October, 21:52
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    Answer: 15.42%

    Explanation: PV (present value) = $21,320

    FV (Future Value) = $ 32.1 million.

    Years (y) = 1947-1998 = 51years

    r = (FV/PV) ^ (1/y) - 1

    r = ($32,100,000 / $21,320) ^ (1/51) - 1

    r = ($1505.6285) ^ (0.0196) - 1

    r = 1.15421 - 1

    r = 0.0154205 X 100%

    r = 15.42%
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