A coin sold at auction in 2017 for $3,450,000. The coin had a face value of $10

Question

A coin sold at auction in 2017 for $3,450,000. The coin had a face value of $10 when it was issued in 1789 and had previously been sold for $395,000 in 1973. At what annual rate did the coin appreciate from its first minting to the 1973 sale? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) a. b. What annual rate did the 1973 buyer earn on his purchase? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) c. At what annual rate did the coin appreciate from its first minting to the 2017 sale? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Rate of return from 1789 to 1973 Rate of return from 1973 to 2017 Rate of return from 1789 to 2017 5.92 % a. b. c.

Explanation / Answer

(A) 10(1+i)^184=395000

i=5.92%

(B) The rate that 1973 buyer will earn is

395000(1+i)^44=3450000

i=5.04%

(C) annual rate at which coin appreciate from minting to 2017 is

10(1+i)^228=3450000

i=5.75%

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