Accounting

1. You have \$100 and a bank is offering 5% interest on deposits. If you deposit the money in the bank, how much will you have in one year?

2. You expect to have \$1000 in one year. A bank is offering loans at 6% interest per year. How much can you borrow today?

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Brett has almond orchards, but he is sick of almonds and prefers to eat walnuts instead. The owner of the walnut orchard next door has offered to swap this year’s crop with him in an even exchange. Assume he produces 1000 tonnes of almonds and his neighbour produces 800 tonnes of walnuts. If the market price of almonds is \$100 per tonne and the market price of walnuts is \$1.10 per tonne,

a. Should he make the exchange?

b. Does it matter whether he prefers almonds or walnuts? Why or why not?

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