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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.)

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anthougo

Answer:

His annual rate of return = $2,046,000/$12,567,500 * 100 = -16.28%

Explanation:

The sculpture yielded a negative rate of return as it decreased in value over the 6-year period from $12,567,500 to $10,521,500.  This represents a total negative return of $2,046,000 ($12,567,500 - $10,521,500).  When this negative return is expressed in percentage terms, it gives a negative 16.28%.  This percentage shows by how much the sculpture has decreased in value.

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