Assume that in 2009, an 1896 Morgan silver dollar sold for $8,850.

Assume that in 2009, an 1896 Morgan silver dollar sold for $8,850.

Required:

What was the rate of return on this investment? (Do not include the percent sign (%). Enter rounded answer as directed, but do not use the rounded numbers in intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)

Rate of return

%

rev: 04-29-2011

Explanation:

To answer this question, we can use either the FV or the PV formula. Both will give the same answer since they are the inverse of each other. We will use the FV formula, that is:

FV = PV(1 + r)t

Solving for r, we get:

r = (FV / PV)1 / t – 1

r = ($8,850 / $1)1/113 – 1

r = 0.0837 or 8.37%

Calculator Solution:

Note: Intermediate answers are shown below as rounded, but the full answer was used to complete the calculation.

Enter

113

±$1

$8,850

N

I/Y

PV

PMT

FV

Solve for

8.37%