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Although appealing to more refined tastes, art as a collectible has not always performed so profitably. Assume that in 2015, an auction house sold a statute at auction for a price of $10,426,500. Unfortunately for the previous owner, he had purchased it in 2010 at a price of $12,662,500. What was his annual rate of return on this sculpture? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Rate of return %

Respuesta :

Answer: - 0.03811 or 3.81%

Explanation:

Given that,

Selling price of statute(ending value) = $10,426,500

Purchasing Cost of statute (beginning value) = $12,662,500

n = 5 years

[tex]Compound\ annual\ growth\ rate = (\frac{Ending\ Value}{Beginning\ Value}) ^{\frac{1}{n} } -1[/tex]

[tex]Compound\ annual\ growth\ rate = (\frac{10,426,500}{12,662,500}) ^{\frac{1}{5}} -1[/tex]

                                                               = 0.9618 - 1

                                                               = - 0.03811 or - 3.81%

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