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Question 1 : The following information is given about a Loan: P or probability of repayment 9 3 % ( 1 P ) Probability of

Question 1: The following information is given about a Loan:
P or probability of repayment 93%
(1 P) Probability of default 7%
LGD, or Loss Given Default 60%
(1-LGD) or Recovery Amount 40%
Rf or risk-free rate 4%
RP or Risk Premium 4%
Assuming the Lender wants a risk premium of 4%, what will be the rate charged by the lender?
Input your answer to 4 decimal places, enter 14.26% as .1426.

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