Jeanine Withdrew $10,000 from an Aggressive Growth Mutual Fund, Which

Multiple Choice

Jeanine withdrew $10,000 from an aggressive growth mutual fund, which returned 9.8% over the last 12 months. The funds were provided in exchange for a promissory note from her son's business to finance its expansion. The business has operated for five years and has no other debt. Inflation has been holding steady at 3.2%. The Canadian dollar, is at $1.015 to $1.00 US. Least risk, government securities are paying out 4.5%. If she believes that 1.5% will cover her risk exposure, what rate is the minimum she should realistically charge her son's business?

A) 9.8%
B) 4.5%
C) 8.2%
D) 6.0%
E) 3.2%