Lance Murdock purchased a wooden statue of a Conquistador for $7,900 to put in his home...

Lance Murdock purchased a wooden statue of a Conquistador for $7,900 to put in his home office 9 years ago. Lance has recently married, and his home office is being converted into a sewing room. His new wife, who has far better taste than Lance, thinks the Conquistador is hideous and must go immediately. Lance decided to sell it on e-Bay and only received $4,700 for it, and so he took a loss on the investment. What was his rate of return, that is, the value of i ?

---> What was Lance Murdock's rate of return, that is, the value of i ? Enter a negative percentage for a loss _ %

Please show your work, Thank you=)

Expert Solution

A 4700
   P 7900
   n   9
   i

       A=P(1+i)^n

4700 = 7900(1+i)^9
7900(1+i)^9   = 4700
       (1+i)^9   = 4700/7900   =47/79
(1+i) = (47/79)^(1/9) or
           =   (0.5949)^(1/9)
       1+i   =   0.943933
       i   =   ,0.943933-1
           =   -0.0560669

so I = - 5.6%

jeff jeffy answered 1 year ago

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