A collector bought an antique for $1550. he sold it 9 years later for $2200.

A collector bought an antique for $1550. he sold it 9 years later for $2200. what was the collectors annual effective yield rate?

Expert Solution

Collector bought an antique for $1550

He sold it 9 years later at Future value of $2200

Calculating its annual effective yield rate:-

Future Value = Present Value*(1+r)^n

Where,

r = Effective Annual Interest rate

n= no of periods = 9

Present Value = $1550

$2200 = $1550*(1+r)^9

1.4193548387 = (1+r)^9

Taking 9-root on both sides,

1.039678 = (1+r)

r = 3.97%

So, the collectors annual effective yield rate is 3.97%

jeff jeffy answered 2 years ago

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