You discover an antique in your attic that you purchased at an estate sale 10 years ago for $400.You auction it on Ebay and receive $8,000 for your item.What annual rate of return did you earn?
A) 200.00%
B) 34.93%
C) 30.47%
D) 20.00%

Question

Quizplus · Accepted Answer

To calculate the annual rate of return, we can use the formula: 
[(final value/initial value)^(1/years)] - 1

In this case, the initial value is $400 and the final value is $8,000. The time period is 10 years.

Plugging those values into the formula: 
[($8,000/$400)^(1/10)] - 1 
= (20^(1/10)) - 1 
= 0.3493 or 34.93%

Therefore, the answer is B.

You Discover an Antique in Your Attic That You Purchased