Question:

Let's solve a numerical example using the model above. Suppose that D=1 .1, c=.1, h=.2 and \"F3. Where D is the deposit rate or cost of capital, c is the xed fee, h is the escape cost, and w is wealth. What is the gap (in absolute value) between the deposit rate and gross interest rate? (Please round to the nearest 0.01. In other words. your answer should be of the format x.xx)