You have two investment opportunities. One will have an 8% rate of return on an investment of $10,000; the other will have a 10% rate of return on principal of $14,000. You would like to take advantage of the higher-yielding investment but have only $10,000 available.
Required:
What is the maximum rate of interest that you would pay to borrow the $4,000 needed to take advantage of the higher yield?