Accounting: What the Numbers Mean 9th Edition by Wayne W McManus, Daniel F Viele, David H Marshall

Exercise 59

Compare investment alternatives You have two investment opportunities.

One will have a 10% rate of return on an investment of $500; the other will have an 11% rate of return on principal of $700. You would like to take advantage of the higher-yielding investment but have only $500 available.

Required:

What is the maximum rate of interest that you would pay to borrow the $200 needed to take advantage of the higher yield?