Find the highest interest rate, Microeconomics

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.

Posted Date: 2/13/2013 1:01:03 AM | Location : United States







Related Discussions:- Find the highest interest rate, Assignment Help, Ask Question on Find the highest interest rate, Get Answer, Expert's Help, Find the highest interest rate Discussions

Write discussion on Find the highest interest rate
Your posts are moderated
Related Questions
define cost its types with curves

• Production Function . The factors of production have to be combined in a particular manner to produce a certain product. Think of baking a cake which involves mixing fixed propor

Consider a television manufacturer based in Korea. It produces TVs in Korea at a total cost of Y 2 + 2 Y where Y is the number of televisions they produce in Korea. It can als

WORLD TRADE ORGANISATION (WTO): The International Trade Organisation (ITO), originally, was proposed to be set up along with the World Bank and the IMF on the recommendations

What factors shift the Aggregate demand curve to right and what factors shift the AD curve to left?  AD shifts to the right when any component of AD enhances autonomously; e.g

American Long Run Growth, 1800-1973 Throughout the 19th and the first three quarters of twentieth century the measured pace of economic growth continued to accelerate. The meas

Define the term Entrepreneurship Entrepreneurship :   An entrepreneur is an individual who takes risks and organises the factors of production to make a product and therefore

Why is it considered well to bring all BOP's to zero?   If BOP of any country is zero, it reflects that the present account of that country has sufficient balance to meet the n

The government decides to implement a new economic stimulus package targeted at American Farmers. The stimulus package gives every household a $300 prepaid credit card that may on