Think Break 21

# Think Break 21 - Think Break#21 Back to the antique tractor...

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Unformatted text preview: Think Break #21 Back to the antique tractor: suppose you bought it for \$6,000. Your spouse is mad, saying it's a waste of money--you could have bought a mutual fund and made 7% annual return. You both agree that you can sell it for \$7,500 in 3 years: but what is your rate of return? Think Break #21 Answer Back to the antique tractor: suppose you bought it for \$6,000. Your spouse is mad, saying it's a waste of money. You both agree that you can sell it for \$7,500 in 3 years, but what will be the rate of return? r = (FV/PV)1/t 1 = (7,500/6,000)1/3 1 r = 0.077217345 = 7.72% ...
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## This note was uploaded on 08/08/2008 for the course AAE 320 taught by Professor Mitchell during the Spring '08 term at University of Wisconsin.

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