Question

In September of 1998, your father purchased a Michael Jordan basketball card for $0.70. At present, the card is a collector’s item that would fetch $1,900 if sold. If your father were to sell this card now, in September of 2020, what would be the annualized percentage return on his investment?

Answer 1

43.24%

Explanation:

The computation of annualized percentage return on his investment is shown below:-

Future value = Present value × (1 + rate of interest ÷ 100)^time period

$1,900 = $0.70 × (1 + r ÷ 100)^22

(1900 ÷ 0.7)^(1 ÷ 22) = (1 + r ÷ 100)

(1 + r ÷ 100) = 1.4324

r = 1.4324 - 1

= 43.24%

we simply applied the above formula.