Your friend has two investment opportunities that she is considering and has asked for your advice regarding proceed. One will have an 10.0% rate of return on an investment of $540; the other will have a 14.0% rate of re $760. She would like to take advantage of the higher-yielding investment but has only $540 available. Required:
Your friend has two investment opportunities that she is considering and has asked for your advice regarding proceed. One will have an 10.0% rate of return on an investment of $540; the other will have a 14.0% rate of re $760. She would like to take advantage of the higher-yielding investment but has only $540 available. Required:
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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
Transcribed Image Text:Exercise 3-11 (Algo) Compare investment alternatives LO 3-2
Your friend has two investment opportunities that she is considering and has asked for your advice regarding how she should
proceed. One will have an 10.0% rate of return on an investment of $540; the other will have a 14.0% rate of return on an investment of
$760. She would like to take advantage of the higher-yielding investment but has only $540 available.
Required:
What is the maximum rate of interest that your friend should be willing to pay to borrow the $220 needed to take advantage of the
higher yield?
Note: Do not round intermediate calculations. Round your answer to 2 decimal places.
Maximum rate of interest
%
4
27
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