A coin that was featured in a famous novel sold at auction in 2014 for $4,687,00
ID: 2726855 • Letter: A
Question
A coin that was featured in a famous novel sold at auction in 2014 for $4,687,000. The coin had a face value of $1 when it was issued in 1787 and had previously been sold for $290,000 in 1967.
At what annual rate did the coin appreciate from its first minting to the 1967 sale? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
What annual rate did the 1967 buyer earn on his purchase? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
At what annual rate did the coin appreciate from its first minting to the 2014 sale? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
A coin that was featured in a famous novel sold at auction in 2014 for $4,687,000. The coin had a face value of $1 when it was issued in 1787 and had previously been sold for $290,000 in 1967.
Explanation / Answer
a Coin Face value in 1787 1 Coin sold in 1967= 290,000 Compounding factor 290,000 No Of Years = 180 Years Assume the annual rate =k So, (1+k)^180=290000 k is aprrox 7.2375% So Rate of return till 1967 sale =7.2375% b Coin Value in 1967 290,000 Coin value as sold in 2014 4,687,000 Compounding factor = 16.1621 No of Years = 47 Assume the annual rate =k So, (1+k)^47=16.1621 k =6.099% approx So Rate of return in 2014 =6.099% c Rate of Appreciation since minting: Total Appreciation & Compounding since minting= 4,687,000 No of years = 227 Assume the annual rate =k So, (1+k)^227=4687000 or, k=7.00085% So nAppreciation since minting =7.00085%
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