An entrepreneur needs funds for a project

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An entrepreneur needs funds for a project. She has funds of her own, but enough to cover the required investment of $100. If the entrepreneur doesnt misbehave, the project will succeed with probability .9, yielding a gross return of 120 in one year. With probability .1, it fails and yields nothing. If the entrepreneur misbehaves, on the other hand, she obtains a private benefit of $14 in one yearm while loweering the probability of success to .5. Lenders require a gross return of $1 in one year on $1 loaned today. What is the manimum amound he will be able to borrow? Explain in detail. What then is the amount of fund of his own she must put into the project if he is to get financing?

Reference no: EM131337909

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