You have accumulated $8000.00 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 will pay 8%, but the minimum investment is $10,000.00
A. Calculate the amount of return you would earn if the $8,000.00 were invested for one year at 6%.
B. Calculate the net amount you would earn if $2000.00 were borrowed at a cost of 15%, and then $10,000.00 were invested for one year at 8%.
C. Calculate the net rate of return on your investment of $8000 if you accept the strategy of part b.
D. in addition to the amount of investment required and the rate of return offered what other factors would you normally consider before making an investment decision such as the one described in this excersize?