Question

Although appealing to more refined tastes, art as a collectible has not always performed so profitably. Assume that in 2015, an auction house sold a statute at auction for a price of $10,521,500. Unfortunately for the previous owner, he had purchased it in 2009 at a price of $12,567,500. What was his annual rate of return on this sculpture? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Answer 1

The annual rate of return on the sculpture is -16.23%.

Step-by-step explanation:

To find the annual rate of return on the sculpture, we need to calculate the percentage change in its value over the period from 2009 to 2015.

The formula for calculating the annual rate of return is:

Rate of Return = ((Final Value - Initial Value) / Initial Value) * 100

Using the given values, we can plug them into the formula:

(($10,521,500 - $12,567,500) / $12,567,500) * 100 = -16.23%

Therefore, the owner had a negative annual rate of return of approximately -16.23% on the sculpture.