You have accumulated $7,300 and are looking for the best rate of return that can be earned over the next year. A bank savings account will pay 10%. A one-year bank certificate of deposit will pay 12%, but the minimum investment is $10,300.
a. Calculate the amount of return you would earn if the $7,300 were invested for one year at 10%.
b. Calculate the net amount of return you would earn if $3,000 were borrowed at a cost of 20%, and then $10,300 were invested for one year at 12%. (Round intermediate calculations.)
c. Calculate the net rate of return on your investment of $7,300 if you accept the strategy of part b. (Round intermediate calculations. Round your answer to 2 decimal places.)