Reference no: EM132764612

SECTION B

1. Although appealing to more refined tastes, art as a collectible has not always performed so profitably. During 2003, Sotheby's sold the Edgar Degas bronze sculpture Petite Danseuse de Quartorze Ans at auction for a price of $10,311,500. Unfortunately for the previous owner, he had purchased it in 1999 at a price of $12,377,500. What was his annual rate of return on this sculpture?

2. You have just made your first $2,000 contribution to your individual retirement account. Assuming you earn a 12 percent rate of return and make no additional contributions, what will your account be worth when you retire in 45 years? What if you wait 10 years before contributing? (Does this suggest an investment strategy?)

3. You are scheduled to receive $25,000 in two years. When you receive it, you will invest it for six more years at 7.9 percent per year. How much will you have in eight years?

4. You expect to receive $10,000 at graduation in two years. You plan on investing it at 11 percent until you have $100,000. How long will you wait from now?