Question

Lance Murdock purchased a wooden statue of a Conquistador for $7,600 to put in his home office 7 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 ​$5,300 for​ it, and so he took a loss on the investment. What was his rate of​ return, that​ is, the value of? What was Lance​ Murdock's rate of​ return, that​ is, the value of ? Enter a negative percentage for a loss. % (Round to two decimal​ places.)

Answer 1

P = $7600 Purchase Value A = $5300 Future value / Sold Value n = 7 years i = the rate of return per year A = P(1 + i)^n => 5300 = 7600(1 + i)^7 => 7600(1 + i)^7 = 5300 => (1 + i)^7 = 5300/7600 => 1 = -0.0502 or - 5.02% Answer: Lance Murdock's rate of return is - 5.02%