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Solve for maximum interest rate on borrowed funds

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You have two investment opportunities. One will have a 9.0% rate of return on an investment of $590; the other will have an 12.0% rate of return on principal of $860. You would like to take advantage of the higher yielding investment but have only $590 available.

What is the maximum rate of interest that you would pay to borrow the $270 needed to take advantage of the higher yield? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

Maximum rate of interest =

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Instructional notes and strategy given in attached. The expert solves for maximum interest rates on borrowed funds.

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  • BSc, University of Virginia
  • MSc, University of Virginia
  • PhD, Georgia State University
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