Question
Worksheet Difficulty: 2 Medium Learning Objective: 03-02 Explain the importance and show the calculation of return on investment. You have accumulated $4,050 and are looking
WorksheetDifficulty: 2 MediumLearning Objective: 03-02 Explain the importance and show the calculation of return on investment.
You have accumulated $4,050 and are looking for the best rate of return that can be earned over the next year. A bank savings account will pay 6%. A one-year bank certificate of deposit will pay 8%, but the minimum investment is $7,050.
Required
a.Calculate the amount of return you would earn if the $4,050 were invested for one year at 6%.
b.Calculate the net amount of return you would earn if $3,000 were borrowed at a cost of 16%, and then $7,050 were invested for one year at 8%.(Round intermediate calculations.)
c.Calculate the net rate of return on your investment of $4,050 if you accept the strategy of part b.(Round intermediate calculations. Round your answer to 2 decimal places.)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-text-image.webp)
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Step: 3
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started