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

Stock market, Stock Market: A place where shares of joint stock corporation...

Stock Market: A place where shares of joint stock corporations are sold andbought. Most modern stock markets no longer have a physical presencehowever rather connected computer net

Price elasticity of demand and of supply, List and describe the determinant...

List and describe the determinants of the price elasticity of demand and of supply.

Marketing economies, Marketing Economies: These are derived from the ...

Marketing Economies: These are derived from the bulk purchasing of inputs and bulk distribution of outputs. A large firm is able to buy its raw materials in larger quantities

Monopsony, What are the advantages and disadvantages of monopsony?

What are the advantages and disadvantages of monopsony?

Insurance market and calculate risk premium, There are two individuals in t...

There are two individuals in town, one is high risk and the other is low risk.1 The probabilities of having an accident for the low risk individual and high risk individual are p

Distinction between human capital and resource and manpower , Distinction b...

Distinction between Human Capital and Resource and Manpower Health and education are normally considered as human capital. Health includes both physical health and fitness. E

Measures used to restrict international trade, Measures used to restrict In...

Measures used to restrict International Trade: These are taxes imposed on traded commodities as they cross national boarders. These are two main types of tariffs. An import ta

Explain hard currency, International economic relations also vary, in large...

International economic relations also vary, in large measure, on monetary issues.  You are unlikely to accept the Turkish Lire in payment for your wages in this country, easily bec

Explain the meaning of poverty, Problem 1: (a) Explain the meaning of ...

Problem 1: (a) Explain the meaning of poverty. Briefly explain how poverty is measured? (b) Clearly explain the relationship between Poverty, Inequality and Economic Growt

Elasticity of demand, "Assume the local fixed telecommunications company is...

"Assume the local fixed telecommunications company is a monopoly. It costs the company €2 per month to give voice messages service to a customer. Elasticity of demand for voice mes

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