Question

Although appealing to more refined tastes, art as a collectible has not always performed so profitably. During 2003, a sculpture was sold at auction for a price of $10,303,500. Unfortunately for the previous owner, he had purchased it in 1999 at a price of $12,384,500. What was his annual rate of return on this sculpture?

Answer 1

F	=	P*(1+i)^n		Where,
$ 10,303,500	=	12,384,500*(1+i)^4		P	Cost of Sclupture			$ 12,384,500
0.832	=	(1+i)^4		F	Sale proceeds of sclupture			$ 10,303,500
(0.832)^(1/4)	=	1+i		i	Annual rate of return			?
0.9551	=	1+i		n	Life in Years(from 1999 to 2003)			4
i	=	-0.0449
or,
Annual Rate of return is		-4.49%