Question

Suppose that 2 years ago you bought an old record player at a yard sale for $10. You saw today on E-bay that the same record player is selling for $79.99. If you were to sell the record play at that price today, what would be the implied return percentage?

Answer 1

182.8%

Step-by-step explanation:

Since i have purchased the old record player 2 years ago at the price of $10 which is now selling for the price of the $79.99, the implied percentage in this case shall be determined as follows:

Future value=Present value(1+return percentage)^2

In the given question

Future value=$79.99

Present value= Price of old record player two year ago=$10

$79.99=$10(1+return percentage)^2

$7.999=(1+return percentage)^2

Taking square root on both sides

2.828=1+return percentage

2.828-1=Return percentage

Return percentage=1.828 or 182.8%