Suppose Colin Noel could borrow $200,000 for one year at an interest rate of 10 percent. He is virtually certain that he can invest this money in inventory that he could sell over a year for $300,000. If his selling costs were $50,000 and he were to pay his interest out of his profits, how much would Colin Noel’s expected profit rate be (after the interest is paid) on his investment?

Answer rating: 100% (QA)

First lets calculate how much Colin will need to pay in interest Interest Prin... View the full answer