SuperTutor

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  • MBA, Ph.D in Management
    Harvard university
    Feb-1997 - Aug-2003

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    Strayer University
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Category > Accounting Posted 22 May 2017 My Price 6.00

Difficulty: 2 MediumLearning Objective

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.)

 

Answers

SuperTutor
(15)
Status NEW Posted 22 May 2017 04:05 AM My Price 6.00

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