A group of businessmen formed a partnership tobuy and race

Chapter , Problem 7A-2

(choose chapter or problem)

A group of businessmen formed a partnership tobuy and race an Indianapolis-type racing car. Theyagreed to pay an individual $50,000 for the car andassociated equipment. The payment was to be in alump sum at the end of the year. In what must havebeen beginners luck, the group won a major racethe first week and $80,000. The rest of the first year,however, was not as good: at the end of the firstyear, the group had to pay out $35,000 for expensesplus the $50,000 for the car and equipment. Thesecond year was a poor one: the group had to pay$70,000 just to clear up the racing debts at the endof the year. During the third and fourth years, rac-ing income just equaled costs. When the group wasapproached by a prospective buyer for the car, theyreadily accepted $80,000 cash, which was paid atthe end of the fourth year. What rate of return didthe businessmen obtain from their racing venture?