Question

a friend asks to borrow $51 from you and in return will pay you $54

in one year. If your bank is offering a 6.4% interest rate on deposits and​ loans:

a. How much would you have in one year if you deposited the $51 ​instead?

b. How much money could you borrow today if you pay the bank $54 in one​ year?

c. Should you loan the money to your friend or deposit it in the​ bank?

Answer 1

a)
	FV= PV*(1+r)^n
	Where,
	FV= Future Value
	PV = Present Value
	r = Interest rate
	n= periods in number
	= $51*( 1+0.064)^1
	=51*1.064
	= $54.26
b)	PV= FV/(1+r)^n
	Where,
	FV= Future Value
	PV = Present Value
	r = Interest rate
	n= periods in number
	= $54/( 1+0.064)^1
	=54/1.064
	= $50.75
c)	Should NOT, bacuase of less return from friend .