SOLUTION: 15. Nathan is considering selling a painting he inherited from his grandparents and which cost $200 when purchased 72 years ago. He accepted an offer for $22 000 for it recently. W

Question 1098709: 15. Nathan is considering selling a painting he inherited from his grandparents and which cost $200 when purchased 72 years ago. He accepted an offer for $22 000 for it recently. What is the annualized rate of return on this painting?

Answer by jorel1380(3719) (Show Source): You can put this solution on YOUR website!
If FV=P*(1+r)^y, where FV is future value, P is the principal (or original value), r is the annual interest rate, and y is years; then:
22,000=200(1+r)^72
110=(1+r)^72
ln 110=ln (1+r)^72=72 ln (1+r)
ln (1+r)=ln 110/72=0.06528444952489466983444354212013
e^ln (1+r)=(1+r) ln e=1+r=e^0.06528444952489466983444354212013
r=1.0674626204384954364596339051461 - 1= 0.0674626204384954364596339051461
The rate of return would be 6.74626204384954364596339051461%
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