You have accumulated $8,000 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 $10,000.
Required
(a)Calculate the amount of return you would earn if the $8,000 were invested for one year at 6%. (Omit the "$" sign in your response.)
Amount of return $
(b)Calculate the net amount of return you would earn if $2,000 were borrowed at a cost of 15%, and then $10,000 were invested for one year at 8%. (Omit the "$" sign in your response.)
Net amount of return $
(c) Calculate the net rate of return on your investment of $8,000 if you accept the strategy of part b. (Round your answer to 2 decimal places. Omit the "%" sign in your response.)