You have accumulated $4,150 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 $7,150.
| Required: |
| (a) |
Calculate the amount of return you would earn if the $4,150 were invested for one year at 10%. (Round your answer to nearest whole number. Omit the "$" sign in your response.)
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| (b) |
Calculate the net amount of return you would earn if $3,000 were borrowed at a cost of 20%, and then $7,150 were invested for one year at 12%. (Round your answer to nearest whole number. Omit the "$" sign in your response.)
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| (c) |
Calculate the net rate of return on your investment of $4,150 if you accept the strategy of part b.(Round your intermediate calculations to nearest whole dollar amount and final percentage answer to 2 decimal places. Omit the "%" sign in your response.)
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