Startup

Review

A bank is planning to loan a startup $$100$ for $1$ year. If there is a $60\%$ chance that the startup will not be able to pay back the money to the bank and a $40\%$ chance that the startup will be able to pay back the money to the bank with interest. What interest rate does the bank need to charge on this loan in order to earn a $6\%$ expected return?

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a $132\mathrm{.}75\%$

b $160\%$

$162\mathrm{.}5\%$

$165\%$

Correct Answer:

$d-165\%$