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?
Homework Answers
Answer:
a. Amount in 1 year = 49 * 1.059 = 51.891
b. amount to be borrowed today = 52/1.059 = 49.1029
c. since the bank is giving 51.891 it is better to deposit in the bank.
Add Answer to:
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