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You have accumulated $7,500 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 $10,500. Required: a. Calculate the amount of return you would earn if the $7,500 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 $10,500 were invested for one year at 8%. c. Calculate the net rate of return on your investment of $7,500 if you accept the strategy of part b. (Round your answer to 2 decimal places.) a. Amount of return b. Net amount of return c. Net rate of return % You have accumulated $7,500 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 $10,500. Required: a. Calculate the amount of return you would earn if the $7,500 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 $10,500 were invested for one year at 8%. c. Calculate the net rate of return on your investment of $7,500 if you accept the strategy of part b. (Round your answer to 2 decimal places.) a. Amount of return b. Net amount of return c. Net rate of return %
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Related Book For
Accounting What the Numbers Mean
ISBN: 978-0073527062
9th Edition
Authors: David H. Marshall, Wayne W. McManus, Daniel F. Viele,
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