Macroeconomics 11th Edition by Stephen Slavin

Exercise 10

Suppose Colin Noel could borrow $200,000 for one year at an interest rate of 10 percent. He is virtually certain that he can invest this money in inventory that he could sell over a year for $300,000. If his selling costs were $50,000 and he were to pay his interest out of his profits, how much would Noel's expected profit rate be on his investment?