A friend asks to borrow $48 from you and in return will pay you $51 in one year. If your bank is offering a 6.5% interest rate on deposits and loans: a. How much would you have in one year if you deposited the $48 instead? b. How much money could you borrow today if you pay the bank $51 in one year? c. Should you loan the money to your friend or deposit it in the bank?

A friend asks to borrow $48 from you and in return will pay you $51 in one year. If your bank is offering a 6.5% interest rate on deposits and loans: a. How much would you have in one year if you deposited the $48 instead? b. How much money could you borrow today if you pay the bank $51 in one year? c. Should you loan the money to your friend or deposit it in the bank?

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Question

A friend asks to borrow $48 from you and return will pay you $51 in one year. If your bank is offering a 6.5% interest
rate on deposits and loans:
a. How much would you have in one year if you deposited the $48 instead?
b. How much money could you borrow today if you pay the bank $51 in one year?
c. Should you loan the money to your friend or deposit it in the bank?
D

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