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Q13. A business is seeking a loan of $1.75 million. It is facing an equal probability of stagnation or growth next year, earning either $2
Q13. A business is seeking a loan of $1.75 million. It is facing an equal probability of stagnation or growth next year, earning either $2 million or $4 million in net income, respectively. What promised interest rate must this business promise a lender to obtain the loan?
1) If the current risk-free interest rate is 5%
2) If the current risk-free interest rate is 20%
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