3. Is it really a good investment? Note: In these situations, PV and FV will be given, as well as the investment timeframe (NPER); use Excels =RATE formula to calculate the annual rate of return. Input PV as a negative number in order for Excels RATE function to operate correctly. The PBS TV program Antiques Roadshow features expert appraisals of art, furniture, pottery, and other such antiques. Often, people buy antiques speculatively, hoping their value will rise and they will turn out over time to be a good investment. Deploy your knowledge of asset valuation using Excel formulas to calculate the investment return in the following cases.

a. Marylouise Salas bought a Federal period chest from an antique store in 1975 for $800. In 2005, Leigh Keno appraised it at $8,000. Calculate Marylouises rate of return, assuming she sold the chest in 2005 for the appraisal value.

b. Bud Simonson bought an original 1931 Frankenstein movie poster at a garage sale in 1991 for $50. In 2015, Craig Flinner appraised the poster at $1,500. Calculate Buds rate of return, assuming he sold the poster in 2015 for the appraised value.

c. In case a) above, $800 in 1975 had the same inflation-adjusted buying power as $2,900 in 2015, according to the BLS Inflation Calculator: http://www.bls.gov/data/inflation_calculator.htm Recalculate Ms. Salas rate of return using the real (inflation-adjusted) initial value.

d. In case b) above, $50 in 1991 had the same inflation-adjusted buying power as $87 in 2015, according to the Inflation Calculator. Recalculate Mr. Simonsons rate of return using the real (inflation-adjusted) initial value.

e. If our benchmark rate of return for long-term investments is the 7% real average broad stock-market return, who earned an economic profit from the antique investment? Did anyone earn an accounting loss? An economic loss?