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You observe the following market interest rates, for both borrowing and lending: One-year rate = 5% Two-year rate = 6% One-year rate one year from

You observe the following market interest rates, for both borrowing and lending:

One-year rate = 5%

Two-year rate = 6%

One-year rate one year from now = 7.25%

Suppose you borrow $100 for two years, lend the proceeds for one year, and then lend the total interest and principal received for 1 year at the start of year 2 for one year. What is your gain to the nearest cent?

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