Find the highest interest rate, Microeconomics

Assignment Help:

Find the highest interest rate:

There are 2 entrepreneurs, Sally and Paul.  The return to their projects are given by:

145_Find the highest interest rate.png

To finance the project, each entrepreneur needs to borrow from a bank an initial capital of 100.  The loan contract stipulates that if the project return is high, then the firms pays principal plus interests, and if the project return is low, then the bank seizes whatever value that the firm has left over.  Find the highest interest rate at which Sally is willing to borrow, the highest interest rate at which Paul is willing to borrow, and the bank's expected net profit if the interest rate is 10% and 18%, respectively.


Related Discussions:- Find the highest interest rate

Is it possible for a firm to be price taker and price maker, Is it possible...

Is it possible for a firm to be both Price taker and price maker?  A firm can either be a price taker or a price maker. It cannot be price maker and price taker at the similar

Why firm charges different prices to different consumer, Why firm charges d...

Why firm charges different prices to different consumer?  Every firm needs to maximize its profit. When goods are sold to different customers, each customer negotiate price of

Uses of balance of payments account, Uses of Balance of payments account: ...

Uses of Balance of payments account: It removes the uncertainty associated with the flexible exchange rate regime and brings stability. It also indirectly imposes some anti inf

Why the productivity growth slowdown of america in 1973, The Productivity G...

The Productivity Growth Slowdown However in 1973 steady trend of climbing rates of productivity growth stopped cold. Between 1973 and 1995 measured growth in output per worker

Explain about banking cycle, Q. Explain about Banking Cycle? An economi...

Q. Explain about Banking Cycle? An economic cycle that results from cyclical changes in the attitudes of banks toward lending risk. When economic times are good, bankers become

What is cost effectiveness analysis, Q. What is Cost effectiveness analysis...

Q. What is Cost effectiveness analysis? Cost effectiveness analysis A method which seeks to identify the least cost option for meeting a particular objective. It actives prior

Define migration in microeconomics, Q. Define Migration in Microeconomics? ...

Q. Define Migration in Microeconomics? Migration:It's the movement of human beings from one country or region to another. Sometimes migration is motivated by economic factors (

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd