Answered step by step
Verified Expert Solution
Question
1 Approved Answer
An investor has accumulated $7,250 and is looking for the best rate of return that can be earned over the next year. A bank
An investor has accumulated $7,250 and is looking for the best rate of return that can be earned over the next year. A bank savings account will pay 5%. A one-year bank certificate of deposit will pay 7%, but the minimum investment is $10,250. Required: a. Calculate the amount of return the investor would earn if the $7,250 were invested for one year at 5%. b. Calculate the net amount of return the investor would earn if $3,000 were borrowed at a cost of 15%, and then $10,250 were invested for one year at 7%. c. Calculate the net rate of return on the investment of $7,250 if the investor accepts the strategy of part b. Note: Round your answer to 2 decimal places. a. Amount of return b. Net amount of return c. Net rate of return %
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started