A friend has $4,800 that has been saved from her part-time job. She will need he

Question

A friend has $4,800 that has been saved from her part-time job. She will need her money, plus any interest earned on it, in six months and has asked for your help in deciding whether to put the money in a bank savings account at 5.5% interest or to lend it to Judy. Judy has promised to repay $5,100 after six months. Required: (a) Calculate the interest earned on the savings account for six months. (Omit the "$" sign in your response.) Interest earned $ (b) Calculate the rate of return if the money is lent to Judy. (Round your percentage answer to two decimal places. Omit the "%" sign in your response.) Rate of return on an annual basis % (c) Which alternative would you recommend purely from a financial perspective? (Click to select)Put the money in a bank savings account.Lend the money to Judy.

Explanation / Answer

a) interest earned = 4800*.055/2=132 b) rate of return = (5100-4800)*2/4800 = 12.5% annually c) lending to Judy will be better from a financial perspective

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.