Question: An art collector has the opportunity to invest in paintings; the investment requires an outlay of 2 million. He is certain that he will be able to sell the paintings for 2.18 million in one year. He also has the opportinity to invest in certificates of deposit (CDs) which pay 10% a year.
What is the Future Value of the 2 million if the collector purchases the Cds?
Is the investment in the painting a good investment?
What is the rate of return for the investment paintings?