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Assume that you and your bank agree that the probability that you will default on a loan and repay nothing is 15% and that the

Assume that you and your bank agree that the probability that you will default on a loan and repay nothing is 15% and that the appropriate interest rate is 6%. What interest rate would you have to promise to pay in order to get a loan, assuming risk-neutrality? What is your cost of capital?

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