Question

A famous painting was sold in 1947 for ​$21 comma 320. In 1998 the painting was sold for ​$32.1 million. What rate of interest compounded continuously did this investment​ earn?

Answer 1

Answer: 15.42%

Explanation: PV ( present value) = $21,320

FV (Future Value) =$ 32.1 million.

Years(y) = 1947-1998 = 51years

r = (FV/PV)^(1/y) - 1

r = ( $32,100,000 / $21,320) ^ ( 1/51) - 1

r = ( $1505.6285)^ ( 0.0196) - 1

r = 1.15421 - 1

r = 0.0154205 X 100%

r = 15.42%