Q3

You have $ 400and a bank is offering 4.5 %interest on deposits. If you deposit the money in the bank, how much will you have in one year?In one year you will have $

.

Q4

A friend asks to borrow $ 55 from you and in return will pay you $ 58 in one year. If your bank is offering a 6.5 %interest rate on deposits and loans:

a. How much would you have in one year if you deposited the $ 55 instead?

b. How much money could you borrow today if you pay the bank $ 58 in one year?

c. Should you loan the money to your friend or deposit it in the bank?

a. How much would you have in one year if you deposited the $ 55 instead?

If you deposit the money in the bank today you will have $ in one year.

b. How much money could you borrow today if you pay the bank $ 58 in one year?

You will be able to borrow $ today.

c. Should you loan the money to your friend or deposit it in the bank?(Select from the drop-down menu.)

From a financial perspective, you should

deposit the money in the bank

lend the money to your friend as it will result in more money for you at the end of the year.