Fred creates a loan agency. They will finance elite vehicles to UBER drivers. Fred

explains his business as follows:

We have signed leases and tomorrow will lend $$50$ million.

We lend each driver $$50,000$ for $1$ year, and they each buy a vehicle for $$50,000.$

We recognize some will default$-$we believe $70$ drivers will fail to repay us$.$

We estimate that vehicles in default can be sold in the secondary market at $78\%$

of their purchase price.

We also will incur an average loss of $$1,375$ per defaulted vehicle, to pay an

individual$-$a repo man$-$to repossess the vehicle.

We believe we will be paid a $3\%$ premium, relative to the $3\%1-$year treasury

rate.

What interest rate will Fred charge his UBER drivers? $($Show work$)$