Pilar can buy a Monet for $7,200,000 today. She believes that the masterpiece can be sold...

Pilar can buy a Monet for $7,200,000 today. She believes that the masterpiece can be sold in 9 years for $19,600,000. What is the annual rate of return that Pilar expects to earn on this art investment?

a. 11.77% (plus or minus .02 percentage points)

b. 172.22% (plus or minus .02 percentage points)

c. 19.14% (plus or minus .02 percentage points)

d. 30.25% (plus or minus .02 percentage points)

e. None of the above is within .02 percentage points of the correct answer

Solutions

Expert Solution

Rate of return is calculated using the RATE function as follows:-

=RATE(nper,pmt,pv,fv)

=RATE(9,,-7200000,19600000)

=11.77%

jeff jeffy answered 2 years ago

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