A broker wants to sell a customer an investment costing $100 with an expected payoff...
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A broker wants to sell a customer an investment costing $100 with an expected payoff in one year of $107.6. The customer indicates that a 7.6 percent return is not very attractive. The broker responds by suggesting the customer borrow $90 for one year at 5.6 percent interest to help pay for the investment.
a. What is the customers expected return if she borrows the money?
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