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inysia [295]
3 years ago
6

Compare investment alternatives You have two investment opportunities. One will have an 8% rate of return on an investment of $1

0,000; the other will have a 10% rate of return on principal of $14,000. You would like to take advantage of the higher-yielding investment but have only $10,000 available.
Required:
What is the maximum rate of interest that you would pay to borrow the $4,000 needed to take advantage of the higher yield?
Business
1 answer:
nasty-shy [4]3 years ago
3 0

Answer:

15%

Explanation:

The maximum rate of return that would be paid to borrow an additional $4,000 needed can be calculated as

Rate of return =\frac{Amount of interest}{Amount borrowed}

Rate of return = $600/$4000

Rate of return = 0.15 or 15%

NOTE: The amount of interest is the difference of interest earned at higher yield and interest earned at a lower yield.

Interest earned (higher yield) = $10,000 x 8%

Interest earned (higher yield) = $800

Interest earned (lower yield) = $14,000 x 10%

Interest earned (lower yield) = $1,400

Difference = $1,400-$800

Difference = $600

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barxatty [35]

Answer:

False

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AleksandrR [38]

The following will cause an increase in producer surplus is <u>the price of a substitute increases</u>.

What is surplus?
The amount of an asset as well as resource that is over the amount that is being actively used is referred to as a surplus. Income, profits, capital, and goods are just a few of the numerous things that can be referred to as a surplus. A surplus in the context of inventories refers to items that are still unsold and on store shelves. When income is earned and expenses are paid, there is a surplus in a budget. When there is excess tax revenue once all government programmes have been fully funded, governments can also experience a budget surplus. It's not always preferable to have a surplus. For instance, a producer who overestimates future demand for a particular product might produce too many unsold units, which could subsequently contribute to quarterly as well as annual financial losses.

To learn more about surplus
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Net income derived after we subtracting the amount of expenses from the total revenue, wihch indicates how much capital the company truly earn from its operation.
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