Lance Murdock purchased a wooden statue of a Conquistador for $7, 000 to put in
ID: 2741675 • Letter: L
Question
Lance Murdock purchased a wooden statue of a Conquistador for $7, 000 to put in his home office 6 years ago. Lance has recently married, and his home office is being converted into a sewing room. His new wife, who has far better taste than Lance, thinks the Conquistador is hideous and must go immediately. Lance decided to sell it on e-Bay and only received $5, 200 for it, and so he took a loss on the investment. What was his rate of return, that is, the value of R What was Lance Murdock's rate of return, that is the value of R Enter a negative percentage for a loss. %Explanation / Answer
1) Calculation of rate of return :
Purchase price 6 years ago = $7000
Sale price = $5200
Loss on sale = ($1800) **(5200 - 7000)
Rate of return = - 1800/7000
= (25.71%) **OVERALL
Annual rate of return = - 300 /7000
= (4.29%)
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