Although appealing to more refined tastes, art as a collectible has not always p

Question

Although appealing to more refined tastes, art as a collectible has not always performed so profitably. During 2003, an auction house sold a painting at auction for a price of $10,221,500. Unfortunately for the previous owner, he had purchased it in 1998 at a price of $12,197,500. What was his annual rate of return on this painting? (Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16)) Annual rate of return %

Explanation / Answer

Annual rate of return formula = (Sale prodeeds of investment - Initial investment)/Initial investment*1/no.of years *100

=(10,221,500-12,197,500)/12197500*1/6 *100

=-2.7%

Note : It is assuming that house was purchased at the beggining of the year 1998

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