Tom is a mushroom farmer and he invests all his spare cash in additional mushrooms, which grow on otherwise useless land the mushrooms double in size during their first year, after which they are harvested and sold at a constant price year round. Tom's friend asks him for a loan of $200, which he promises to repay after a year. How much interest he will his friend have to pay?

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Business

Jonathon Hogan

21 August, 08:52

Tom is a mushroom farmer and he invests all his spare cash in additional mushrooms, which grow on otherwise useless land the mushrooms double in size during their first year, after which they are harvested and sold at a constant price year round. Tom's friend asks him for a loan of $200, which he promises to repay after a year. How much interest he will his friend have to pay?

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Salma Buckley · Answer 1

Tom planted mushrooms in the last year and got double the size he planted.

If he invested the $200 his friend is asking for and the trend from last year continues, he will have $400 worth of mushrooms by the end of the year.

So the best option for Tom to get returns on his money is if his friend will give him at least $200 in interest by year end.

This way Tom would not have lost by borrowing his friend $200