Jack Has $1000 That He Wishes to Invest for the Next

Multiple Choice

Jack has $1000 that he wishes to invest for the next two years. One-year GICs are currently paying eight percent while two-year GICs are paying 12 percent. Economists are predicting that interest rates will rise by the end of the year. What is the minimum interest rate Jack would need in year two, to make the one-year GIC better than the two-year GIC?

A) 12 percent
B) 14 percent
C) 16 percent
D) 17 percent