A friend asks to borrow $55 from you and in return will pay you $58 in one year. Ifyour bank is offering a 6% interest rate on deposits and loans: How much would you have in one year if you deposited the $55 instead? How much money could you borrow today if you pay the bank $58 in one year? Should you loan the money to your friend or deposit it in the bank?

Principles of Accounting Volume 2
19th Edition
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax
Chapter11: Capital Budgeting Decisions
Section: Chapter Questions
Problem 3PA: Use the tables in Appendix B to answer the following questions. A. If you would like to accumulate...
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A friend asks to borrow $55 from you and in return will pay you $58 in one year. Ifyour bank is offering a 6% interest rate on deposits and loans:

  1. How much would you have in one year if you deposited the $55 instead?
  2. How much money could you borrow today if you pay the bank $58 in one year?
  3. Should you loan the money to your friend or deposit it in the bank?
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