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What is the required loan repayment

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An entrepreneur needs a $500 loan to invest in a risky project. The entrepreneur will repay the loan with probability 0.92, and default otherwise. If the bank offers a competitive interest rate on this loan, what is the required loan repayment?

  • $528
  • $533.9
  • $543.5
  • $566.6

Can you please walk me step by step on how you got to your answer

Reference no: EM131564563

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