Question

Ishak. has built up total assets at the end of last year of RM520,000. It consisted...

Ishak. has built up total assets at the end of last year of RM520,000. It consisted of a home
valued at RM350,000 and financial assets valued at RM170,000. During this year his home
appreciated by a -4% because of the contracting housing market, but his financial assets
achieved a return of 6.5%.
i. What is Ishak's total assets worth?

ii. What is his overall rate of return this year?

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Answer #1
1-
current value of home last year value+(1+appreciation rate) 350000*(1-.04) 336000
current value of financial assets last year value+(1+appreciation rate) 170000*(1-.065) 181050
total value of assets 336000+181050 517050
2-
total rate of return during the year (value of assets after a year/value of assets at the time of investment)^(1/n) -1 (517050/520000)^(1/1)-1 -0.57%
total value of assets after a year 517050
total value of assets at the time of investment 520000
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