8. A financial institution has made a 3-year commercial loan. If estimates the likelihood of default on this loan in the first year is 1.3%, the likelihood of default in the second year is 2.1%, and the likelihood of the default in the third year is 3.3%. What is the likelihood of repayment for the loan?

9a. If the expected default rate on a credit card is 7.6%, what interest rate must a financial institution charge on the credit card in order for its expected return to equal its 4.00% cost of funds if the financial institution assumes a 0% recovery rate in the event of default?

b. If the expected default rate on a 1-year home equity loan is 2.69% and the financial institution expects to recover 52% of the total loan return in the event of default, what rate must a financial institution charge on the automobile loan in order for its expected return to equal the risk free rate of 4.00%?

10. Assume that a company has a loan equal to 11% of its market capitalization that must be repaid in 4 years. If the risk-free interest rate is 2.25% and the standard deviation of returns on the companys stock is 0.570, what is the probability the company will default on the loan?