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.)