______    2.      Assume a firm would like to borrow$900 from a bank for one year to invest in a project with thefollowing possible cash flows at time 1:

Probability	40% chance	60% chance
Project cash flows	$375	$2000

The firm has no “assets-in-place,” andtherefore will only be able to use the cash flows from the project(given above) to make payment on the loan. What interest rate willthe bank need to charge on this one-year loan to earn an expectedreturn of 7%?

A. 36.28% B. 39.44% C. 41.10% D. 43.15%

E. 46.85% F. 48.23% G. 50.56% H. 52.17%