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Calculate the amount of return you would earn

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Question - 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%.

c. Calculate the net rate of return on your investment of $4,050 if you accept the strategy of part b.

Reference no: EM131590274

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