A friend asks to borrow $55 from you and in return will pay you $58 in one

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A friend asks to borrow $55 from you and in return will pay you $58 in one year. If your bank is offering a 6% interest rate on deposits and loans:

a. How much would you have in one year if you deposited the $55 instead?

b. How much money could you borrow today if you pay the bank $58 in one year?

c. Should you loan the money to your friend or deposit it in the bank?

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Fundamentals of Corporate Finance

ISBN: 978-0132148238

2nd edition

Authors: Berk, DeMarzo, Harford

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Question Posted: Jan 14, 2012 02:20 AM

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A friend asks to borrow $55 from you and in return will pay you $58 in one

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Fundamentals of Corporate Finance

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