Assume a bank is considering making a loan to a borrower who has a project that they want

to finance.The project requires and initial investment of $100,000.The project may succeed

and pay off $400,000 to the entrepreneur, with a probability of 0.75 (the only other option if

for the project to fail - make $0).Assume instead of lending this business money that the

bank could invest in a default-free government bond that pays 2.5% interest.If the bank

wants to make sure its lending is at least equal to its opportunity cost, what interest rate will

the bank lend at taking into account the uncertainty that they will not get paid back if the

project fails?