Bill gives Ted a loan of $4300 at 5.2% compounded monthly to be repaid in-full as...

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Bill gives Ted a loan of $4300 at 5.2% compounded monthly to be repaid in-full as a lump sum in 2 years. Ted, being sneaky the way he is, takes that $4300 and invests in a "promising" stock that has averaged around 15%, compounded daily. For the first 1/2 year, all goes well, but then suddenly the stock drops to 1% compounded daily and maintains this rate for the remaining year-and-a-half. Will Ted be able to repay his debt and make money? If so, how much will he profit? If not, how much does he still owe? Bill gives Ted a loan of $4300 at 5.2% compounded monthly to be repaid in-full as a lump sum in 2 years. Ted, being sneaky the way he is, takes that $4300 and invests in a "promising" stock that has averaged around 15%, compounded daily. For the first 1/2 year, all goes well, but then suddenly the stock drops to 1% compounded daily and maintains this rate for the remaining year-and-a-half. Will Ted be able to repay his debt and make money? If so, how much will he profit? If not, how much does he still owe?

Answer rating: 100% (QA)

Amount to be repaid by Ted P 4300 r 52 0052 n12 12 A P 1 ht 2013 4300 1 0653 12x2 A 12 ... View the full answer