In 2006, a 50-cent piece issued in 1904 sold for $1,300. What was the rate of...

In 2006, a 50-cent piece issued in 1904 sold for $1,300. What was the rate of return on this investment? Select one: a. 9.01% b. 6.01% c. 7.01% d. 10.01% e. 8.01%

Solutions

Expert Solution

Value in 2006 = Value in 1904 * (1 + rate of return)^{(2006 -
1904)}

$1300 = $0.50 * (1 + rate of return)¹⁰²

(1 + rate of return)¹⁰² = $1300 / $0.50

(1 + rate of return)¹⁰² = 2600

(1 + rate of return) = (2600)^{(1 / 102)}

(1 + rate of return) = 1.080140

Rate of return = 8.0140% or 8.01%

jeff jeffy answered 1 year ago

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