Question 5.10: Baseball Collectibles as Investments In April 2008, the last...

Fundamentals of Corporate Finance Standard Edition

Baseball Collectibles as Investments

In April 2008, the last baseball hit for a home run by Barry Bonds was auctioned off for about $376,000. The price of the ball was considered a bargain, in part because potential buyers were unsure if Bonds would play again. “Experts” on such collectibles often argue that collectibles such as this will double in value over a 10-year period.
So would the ball have been a good investment?

The "Step-by-Step Explanation" refers to a detailed and sequential breakdown of the solution or reasoning behind the answer. This comprehensive explanation walks through each step of the answer, offering you clarity and understanding.
Our explanations are based on the best information we have, but they may not always be right or fit every situation.

The blue check mark means that this solution has been answered and checked by an expert. This guarantees that the final answer is accurate.
Learn more on how we answer questions.

This Question has been Answered.

Already have an account?

Related Answered Questions

Question: 5.11

Saving for College You estimate that you will need about $80,000 to send your child to college in eight years. You have about $35,000 now. If you can earn 20 percent per year, will you make it? At what rate will you just reach your goal? ...

Verified Answer:

If you can earn 20 percent, the future value of yo...

Question: 5.7

Deceptive Advertising? Businesses sometimes advertise that you should “Come try our product. If you do, we’ll give you $100 just for coming by!” If you read the fine print, what you find out is that they will give you a savings certificate that will pay you $100 in 25 years or so. If the going ...

Verified Answer:

What you’re actually getting is the present value ...

Question: 5.S-TP.3

Calculating Rates of Return You’ve been offered an investment that will double your money in 10 years. What rate of return are you being offered? Check your answer using the Rule of 72. ...

Verified Answer:

Suppose you invest $1,000. You will have $2,000 in...

Question: 5.S-TP.4

Calculating the Number of Periods You’ve been offered an investment that will pay you 9 percent per year. If you invest $15,000, how long until you have $30,000? How long until you have $45,000? ...

Verified Answer:

The basic equation is this: $30,000 = $15,000 × [l...

Question: 5.S-TP.2

Calculating Present Values Suppose you have just celebrated your 19th birthday. A rich uncle has set up a trust fund for you that will pay you $150,000 when you turn 30. If the relevant discount rate is 9 percent, how much is this fund worth today? ...

Verified Answer:

The future value is thus $10,000 × 1.3382 = $13,38...

Question: 5.S-TP.1

Calculating Future Values Assume you deposit $10,000 today in an account that pays 6 percent interest. How much will you have in five years? ...

Verified Answer:

We need to calculate the future value of $10,000 a...

Question: 5.13

Waiting for Godot You’ve been saving up to buy the Godot Company. The total cost will be $10 million. You currently have about $2.3 million. If you can earn 5 percent on your money, how long will you have to wait? At 16 percent, how long must you wait? ...

Verified Answer:

$2.3 million = $10 million/

1.05^{t}

...

Question: 5.12

Only 18,262.5 Days to Retirement You would like to retire in 50 years as a millionaire. If you have $10,000 today, what rate of return do you need to earn to achieve your goal? ...

Verified Answer:

The future value is $1,000,000. The present value ...

Question: 5.9

Finding r for a Single-Period Investment You are considering a one-year investment. If you put up $1,250, you will get back $1,350. What rate is this investment paying? ...

Verified Answer:

First, in this single-period case, the answer is f...

Question: 5.5

Single-Period PV Suppose you need $400 to buy textbooks next year. You can earn 7 percent on your money. How much do you have to put up today? ...

Verified Answer:

We need to know the PV of $400 in one year at 7 pe...