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Your borrowing rate is 8% and your lending rate is 2% APR. The project youre considering costs $1,000 and offers a 7% rate of return.
Your borrowing rate is 8% and your lending rate is 2% APR. The project youre considering costs $1,000 and offers a 7% rate of return. If you have $800 to invest should you take the project? If your current wealth is $2,000, then what is the maximum amount you can consume and still wish to take the project? (What is the maximum amount you are willing to borrow and still take the project?)
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