Appreciation and Elvis Memorabilia

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Name: Cassandra Jones
Date: 11/27/12
MM255-03

Directions for Submitting Your Instructor Graded Assignment
You must show your work on all problems.  You may type your answer right into this document.  Total points for project:  45 points. Projects must be submitted as a Microsoft Word document and uploaded to the Dropbox for Unit 6. All Projects are due by Tuesday at 11:59 PM ET of the assigned Unit.  NOTE: Project problems should not be posted to the Discussion threads. Questions on the project problems should be addressed to the instructor by sending an email or by attending office hours. You will be able to come back to the Dropbox and view your graded work or in the Gradebook after your instructor evaluates it. Project

Get started on the assignment by watching the Should I Invest in Elvis? video on the link below then answer the following questions. http://media.pearsoncmg.com/ph/esm/chet_cleaves_cbsm9e_12/tools/RealWorldCase_before.htm

One day, a man looking something like a famous entertainer from the 1970s, enters The 7th Inning’s memorabilia department and begins examining the items in the showroom. Charlie, intrigued by the stranger’s appearance, greets him and asks him if he is interested in anything in particular. The stranger is particularly interested in Elvis memorabilia. Now, Charlie is a lifelong fan of Elvis, and has actually met and talked with Elvis on many occasions. He enjoys collecting, displaying, and talking about Elvis merchandise with other fans and collectors. It is amazing, but Elvis gear does appreciate at a pretty consistent rate, and the supply of items is limited enough to withstand the ups and downs of the economy. There always seems to be enough money in the hands of collectors to continue to bid up items from year to year, especially any item that had a personal association with Elvis, like his clothes, jewelry, or other personal possessions. The stranger wants to know what he can expect in terms of a return on his investment, should he buy several of the items in the shop. What you know:

Elvis memorabilia has increased by 10–30% each year on average in the past. Charlie thinks that the items will continue to increase at the following rates: Item| Current Value| Expected increase|

Key to Graceland and picture| $750| 10 – 15% increase| Christmas CD| $150| 10%|
TCB necklace| $10,000| 30%|
Mint-condition 1st Album| $12,000| 20%|
Signed 45 rpm records| $750| 10%|
Signed poster| $3,500| 15%|

What you are looking for:
1. How much will items appreciate over time?
2. What factors affect appreciation?
3. Is investing in Elvis memorabilia a good investment?

Solution Plan:
1. If you were to place $15,000 in the bank at 3% interest, how much would you have in the bank after one year if the interest were compounded quarterly? 3/4= .75 % or 0.0075
15000(1+0.0075)
15000(1.0075) = 15112.50
15112.50(1+0.0075)
15112.50(1.0075) = 15225.84
15225.84(1+0.0075)
15225.84(1.0075) = 15340.04
15340.04(1+0.0075)
15340.04(1.0075) = 15455.09
Answer = $15,445.09
2. If you were to buy $15,000 of Elvis memorabilia and it appreciated by 20% per year, how much would the memorabilia be worth at the end of one year?

15000(1+.20)
15000(1.20) = 18000
Answer = $18,000
3. Which investment carries a higher risk of losing money? What factors could cause the value of Elvis memorabilia to depreciate instead of appreciate? The item I can think of that would have the highest risk of losing money would be the Christmas CD. This item could be duplicated and be sold at a lower cost than what it is worth. Factor that could cause items to depreciate is inflation of the product like if they started to produce more of the item. Also if Elvis came back to life then the products would not cost as much.

4. If the key to Graceland costs $750 today and appreciates in value by 15% in one year, what will it be worth one year from today?

750(1+.20)...
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