An investor has accumulated $8,250 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 $11,250.

Required:

1. Calculate the amount of return the investor would earn if the $8,250 were invested for one year at 5%.
2. Calculate the net amount of return the investor would earn if $3,000 were borrowed at a cost of 15%, and then $11,250 were invested for one year at 7%.
3. Calculate the net rate of return on the investment of $8,250 if the investor accepts the strategy of part b.

Note: Round your answer to 2 decimal places.