As we discussed this week, sometimes borrowing and investment can be combined to increase your consumption both today and tomorrow. That happens when your return on investment is greater than the interest. In that case, you can borrow money and make more than enough from your investment to pay back the interest, meaning you earn economic rents and can potentially increase your consumption both now and in the future.

This week, think of and share a potential investment idea:

a) First, think of an investment in which you think the return on investment would be greater than a medium-sized interest rate of say 10%. This could be equipment for business, an investment in your own skills (by taking a class for example), or something else. (2 points)

b) What are the risks associated with this investment? How likely is it that you'd get less than the 10% needed to pay back your loan? (1 point)