Now let's consider moral hazard. From the following table find the probability of a high return for

Project B that leads to an equal expected return for both projects. Assume that the interest rate is 5%

and that the startup costs are financed by borrowing. The time period for this question is one year.

Project A Project B

Startup costs 500 500

High return 600 750

Low return N.A. 0

Probability of a high return 100% x