An entrepreneur has to finance a project of fixed Size I. the entrepreneur has cash on hand A where A 0, or fails, in which it delivers a Zero return. The probability of success depends on the effort exerted by the borrower: if the borrower exerts effort, the probability of success if ph, if the borrower exerts no effort, the probability of success is equal to pl, where Delta P=ph - pl >0. If the borrower exerts no effort, he also obtains a private benefit B > 0, while if there is no private benefit when the borrower exerts effort. Define as Rb the amount of profit going to the borrower, and as Rt the amount of profit going to the lenders in case of success, where R = Rb + R1. All the players are risk neutral. Lenders behave competitively, and both borrower and lenders receive zero if the project fails a) Write down the Net Present Value of the project when the borrower exerts effort and no effort b) What is the minimum level of Rb such that the borrower exerts high effort? Show your work c) What is the minimum level RI such that lenders are willing to lend money to the borrower? Show your work d) Suppose A = 0, Can the borrower obtain a lenders? Explain your answer