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A broker wants to sell a customer an investment costing $100 with an expected payoff in one year of $106.2. The customer indicates that a
A broker wants to sell a customer an investment costing $100 with an expected payoff in one year of $106.2. The customer indicates that a 6.2 percent return is not very attractive. The broker responds by suggesting the customer borrow $80 for one year at 4.2 percent interest to help pay for the investment.
a. What is the customers expected return if she borrows the money? (Round your answer to 1 decimal place.)
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