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Homework answers / question archive / Holding period and annual? (investment) returns   Part A :   Baker Baseball? Cards, Inc

Holding period and annual? (investment) returns   Part A :   Baker Baseball? Cards, Inc

Finance

Holding period and annual? (investment) returns

 

Part A :

 

Baker Baseball? Cards, Inc. originally purchased the rookie card of? Hammerin' Hank Aaron for $33.00. After holding the card for 4 ?years, Baker Baseball Cards auctioned the card for $198.00. What are the holding period return and the simple annual return on this? investment?

 

Part B :

 

Bohenick Classic Automobiles restores and rebuilds old classic cars. The company purchased and restored a classic 1957 Thunderbird convertible 6 years ago for ?$9,500.00. Today at? auction, the car sold for ?$95,000.00. What are the holding period return and the annual return on this? investment?

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1) Computation of Holding period Return and Simple Annual Return:

Holding period Return =  (Ending Value - Initial Value)/Initial value

= ($198-$33)/$33

= 5 or 500%

 

Simple Annual Return = Holding period Return / Number of Years

= 500%/4 years

= 1.25 or 125%

 

2) Computation of Holding period Return and Annual Return:

Holding period Return =  (Ending Value - Initial Value)/Initial value

= ($95,000-$9,500)/$9,500

= 9 or 900%

 

Annual Return = Holding period Return / Number of Years

= 900%/6 years

= 1.5 or 150%

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