P3-27

Txtbk: Engineering Economic Analysis 14th ed. Donald G. Newman

3-27 In 1990 Mrs. John Hay Whitney sold her painting by Renoir, Au Moulin de la Galette, depicting an open air Parisian dance hall, for $71 million. The buyer also had to pay the auction house commission of 10%, or a total of $78.1 million. The Whitney family had purchased the painting in 1929 for $165,000 (a) What rate of return did Mrs. Whitney receive on the investment? (b) Was the rate of retum really as high as you computed in (a)? Explain