Posted by RACHELLE on .
Barry and Steve are good friends. Barry wants to buy a new computer, but he doesn't have the money for it right now. Barry says he will pay Steve $2000.00 in five years if Steve gives him $1600.00 for the computer today. Steve figures that there is an interest rate of 6% if he were to put the money in a bank instead of lending it to Barry. Assuming that there is no risk of Barry not paying the $2000.00 when he says he will, should Steve go through with the loan or should he put his money in the bank? Explain the answer.

arithmetic 
Ms. Sue,
At 6% interest, Steve would earn $96 a year if he put the $1600 in the bank.
0.06 * 1600 = 96
What do you think Steve should do? 
arithmetic 
william,
He should put the money in the bank.So that he doesnot hafe to make aloan later.

arithmetic 
jake,
Actually he could earn $2141+ if he put the money in the the bank for 5 years and he would have immediate access to it if he needed it.