The possible payoffs from Ms. Ketchup’s projects (see Example 18.1, pages 455&456) have not changed but there is now a 40% chance that Project 2 will pay off $24 and a 60% chance that it will pay off $0.
a. Recalculate the expected payoffs to the bank and Ms. Ketchup if the bank lends the present value of $10. Which project would Ms. Ketchup undertake?
b. What is the maximum amount the bank could lend that would induce Ms. Ketchup to take Project 1?
We need at least 10 more requests to produce the solution.
0 / 10 have requested this problem solution
The more requests, the faster the answer.