1 a) b) c) 1. Zaggy Zargawhoop has an idea for a new business. In order to develop his idea, he needs toinvest $600 today. Zaggy's idea will pay off $690 next year for certain.Suppose that Zaggy has no savings to fund his idea and has to borrow money from the bank.a. Suppose that the interest rate for borrowing and for lending is 12%. Should Zaggy borrowmoney from the bank to fund his idea?b. Suppose that the interest rate for borrowing and for lending is 22%. Should Zaggy borrowmoney from the bank to fund his idea?Now suppose that Zaggy has $600 in his bank account.c. Suppose that the interest rate for borrowing and for lending is 12%. Should Zaggy withdrawhis savings to fund his idea?d. Suppose that the interest rate for borrowing and for lending is 22%. Should Zaggy withdrawhis savings to fund his idea?e. Does the method of financing (whether through savings or debt) appear to affect therelationship between the interest rate and the decision to undertake investment? Explain.

i $600 today. Zaggy's idea will pay off $690 next year for certain. ose that Zaggy has no savings to fund his idea and has to borrow money from the bar ppose that the interest rate for borrowing and for lending is 12%. Should Zaggy bon y from the bank to fund his idea? ppose that the interest rate for borrowing and for lending is 22%. Should Zaggy bor y from the bank to fund his idea? suppose that Zaggy has $600 in his bank account. ppose that the interest rate for borrowing and for lending is 12%. Should Zaggy witl vings to fund his idea? ppose that the interest rate for borrowing and for lending is 22%. Should Zaggy wit vings to fund his idea? bes the method of financing (whether through savings or debt) appear to affect the anshin between the interest rote ond the decision to dertoke investment2 Evploin

i $600 today. Zaggy's idea will pay off $690 next year for certain. ose that Zaggy has no savings to fund his idea and has to borrow money from the bar ppose that the interest rate for borrowing and for lending is 12%. Should Zaggy bon y from the bank to fund his idea? ppose that the interest rate for borrowing and for lending is 22%. Should Zaggy bor y from the bank to fund his idea? suppose that Zaggy has $600 in his bank account. ppose that the interest rate for borrowing and for lending is 12%. Should Zaggy witl vings to fund his idea? ppose that the interest rate for borrowing and for lending is 22%. Should Zaggy wit vings to fund his idea? bes the method of financing (whether through savings or debt) appear to affect the anshin between the interest rote ond the decision to dertoke investment2 Evploin

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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