Most each can consume now given they can lend and borrow

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Consider a firm owned by two shareholders, Sarah Dandridge and Peter Burke. Each owns fifty percent of the firm's equity. The firm has a project available to it that costs $50,000 and has a payoff of $70,000. The opportunity cost of capital for both shareholders is 15%. Sarah has wealth now of $30,000 and Peter has wealth now of $50,000. What is the most each can consume now given they can lend and borrow as much as they want at 15%?

Reference no: EM131875424

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