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

What is optimal choice of consumer according to behavior, What is optimal c...

What is optimal choice of consumer according to consumer behavior? Consumer's Optimal Choice: In the fundamental problem of preference maximization, the set of affo

International economics., How has the Haberler''s theory of opportunity cos...

How has the Haberler''s theory of opportunity cost an improvement over the classical theory of trade

Determine the industrial core of world economy, Determine the industrial co...

Determine the industrial core of world economy The industrial core of world economy saw its level of material productivity and standards of living explode in the 19th and 20th

Periodic table, Chemical properties of p block elements

Chemical properties of p block elements

National income, National income: The national income or product ...

National income: The national income or product or expenditure provides a measure of total value at factor cost of final goods and services, which are available either fo

What is an optimization in the methods of mathematics, What is an optimizat...

What is an optimization in the methods of mathematics of modern economics? Optimization is a basic tool for the development of modern microeconomics analysis. Many of economic

Explain how a perfact market responds to changes in consumer, explain how a...

explain how a perfact market responds to changes in consumer demand?

Exit strategy, Exit Strategy The exit strategy denotes that which inves...

Exit Strategy The exit strategy denotes that which investors in an organizations realize all or elements of their investment, regardless of the organizations success.

Distinguish demand pull-cost push , Distinguish demand pull, cost push and ...

Distinguish demand pull, cost push and imported inflation using graphs where appropriate. What are the likely causes of current inflation in Australia?           Answer Co

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