A friend asks to borrow $53 from you and in return will pay you $56 in...

Question

Question

Answer 1

Answer #1

The interest rate on deposits and loans is 5.7%
a) If you deposit $53 in the bank you will have
53*(1.057) in one year
You will have $56.021 in one year

b) If you pay the bank $56 in one year, lets say you have taken
a loan of x dollars.
The interest rate on that loan is 5.7%.
x*(1.057) = 56
x = 56/(1.057)
x = 52.98
If you pay the bank $56 in one year, you could borrow $52.98 today.

c) If you loan the money ($53) to your friend you will have $56 in one year.
However, if you deposit the money ($53) in the bank you will have $56.021 in one year.
So deposit the money in the bank.

Answer 2

Similar Homework Help Questions

A friend asks to borrow $47 from you and in return will pay you $50 in...

A friend asks to borrow $47 from you and in return will pay you $50 in one year. If your bank is offering a 5.6% interest rate on deposits and loans: a. How much would you have in one year if you deposited the $47 instead? b. How much money could you borrow today if you pay the bank $50 in one year? c. Should you loan the money to your friend or deposit it in the bank? a. How...
8. A friend asks to borrow $49 from you and in return will pay you $52...

8. A friend asks to borrow $49 from you and in return will pay you $52 in one year. If your bank is offering a 5.9% interest rate on deposits and loans: a. How much would you have in one year if you deposited the $49 instead? b. How much money could you borrow today if you pay the bank $52 in one year? c. Should you loan the money to your friend or deposit it in the bank?
1. A friend asks to borrow $57 from you and in return will pay you $60...

1. A friend asks to borrow $57 from you and in return will pay you $60 in one year. If your bank is offering a 6% interest rate on deposits and loans: (a) How much (in $) would you have in one year if you deposited the $57 instead? (Round your answer to the nearest cent.) (b) How much money (in $) could you borrow today if you pay the bank $60 in one year? (Round your answer to the...

You expect to have $8,000 in one year. A bank is offering loans at 4.0% interest...

You expect to have $8,000 in one year. A bank is offering loans at 4.0% interest per year. How much can you borrow today? Today you can borrow $. (Round to the nearest cent.)
You borrow $16,000 from your friend. Your friend asks you to pay $421.34 every month for...

You borrow $16,000 from your friend. Your friend asks you to pay $421.34 every month for the next 4 years. What is the interest rate on this loan 1. type of problem. 2. Write formula identifying the rate and term in the factor. 3. Solve with a complete formula.
Complex present value) You would like to have $56 comma 000 in 16 years. To accumulate...

Complex present value) You would like to have $56 comma 000 in 16 years. To accumulate this amount you plan to deposit each year an equal sum in the bank, which will earn 6 percent interest compounded annually. Your first payment will be made at the end of the year. a. How much must you deposit annually to accumulate this amount? b. If you decide to make a large lump-sum deposit today instead of the annual deposits, how large should...

A friend wants to borrow money from you. He states that he will pay you $3,900...

A friend wants to borrow money from you. He states that he will pay you $3,900 every 6 months for 7 years with the first payment exactly 7 years and six months from today. The interest rate is 6.2 percent compounded semiannually. What is the value of the payments today?
1. You expect to have $1,000 in one year. A bank is offering loans at 6.4...

1. You expect to have $1,000 in one year. A bank is offering loans at 6.4 % interest per year. How much can you borrow today if you plan to use this money to repay the loan? Round to the near whole cent. 2. What is the discount factor that is equivalent to a 6.2% discount rate? Round to four decimal places. 3. Given a discount factor of .9390, what is the interest rate? Round to two decimal places.
A friend wants to borrow money from you. He states that he will pay you $2.800...

A friend wants to borrow money from you. He states that he will pay you $2.800 every 6 months for 10 years with the first payment exactly 6 years and six months from today. The interest rate Is an APR of 51 percent with semiannual compounding. What is the value of the payments today? Multiple Choice $32,23430 S23166 33519 o $32.4470 o 5301301

Your brother has offered to give you $ 140, starting next year, and after that growing...

Your brother has offered to give you $ 140, starting next year, and after that growing at 2.5 % per year for the next 20 years. You would like to calculate the value of this offer by calculating how much money you would need to deposit in a local bank so that the amount will generate the same cash flows as he is offering you. Your local bank will guarantee a 6.1 % annual interest rate so long as you...