Michael Illitch bought the Detroit Tigers in 1992 for $82 million, which amounte
ID: 1239764 • Letter: M
Question
Michael Illitch bought the Detroit Tigers in 1992 for $82 million, which amounted to $114.15 million in 2005 dollars. by 2005, the Tigers were worth $292 million. Calculate the real compound annual rate of return on that investment. Please show all work even basic math. Anonymous - 54 minutes later investment in 1992 =82 million which is equal to 114.15 million in 2005 by 2005 the tigers worth =292 million so the increment =292-114.5=177.5 million time elapsed =13 years so the compound real rate = 7.5% Rate Here:Rate Answer Comments ProudCoffee1730 commented I got this response, but I don't understand how the compound real rate is 7.5%. Can someone show me the math for this please?Explanation / Answer
Michael Illitch bought the Detroit Tigers in 1992 for $82 million, which amounted to $114.15 million in 2005 dollars. In 2005 Tigers were worth $292 million. So, increase in value of Detroit Tigers = 292-114.15= $177.85 million Let the annual compound rate of return be 'r' => 292 = 114.15*(1+r)^13 => (1+r)^13=292/114.5 => r+1 = (2.55)^(1/13) => r = 1.075-1=0.075 r=7.5%