Let's say a friend comes to you needing a $10,000 loan. Assume that you actually have an extra $10,000 laying around that you could loan out. This friend says that they will give you $10,400 back at the end of the year. The local bank offers you a 5% interest rate for a $10,000 deposit. Your friend is very honest and reliable, and you know that she will pay you back. From an economic perspective, do you take the deal with the friend or do you deposit the $10,000 at the local bank? Why? Feel free to think outside the box! Reply