Tom wishes to become an entrepreneur and start a business. Suppose that Tom has personal assets worth W .The investment required to start up the business is $200,000. Tom must therefore obtain a loan, and needs to pledge his assets as collateral for the loan. The business entails setting up a small factory, which will hire 50 workers, who will be paid $5,000 each, and produce and sell widgets for total revenue of $500,000. Imagine for simplicity that the lifetime of the business is one year. After this the loan must be repaid Tom must put up his assets as collateral. The interest rate on the loan is 10%. If Tom does not repay his loan, then his assets will be seized by the bank. There is also a 50-50 chance that Tom will be caught, in which case Tom will go to jail, and the expected monetary equivalent of this punishment is $50,000. In addition, Toms business profits for that year will be confiscated. Faced with these pros and cons, Tom must decide whether or not to repay. He needs to compare the costs of defaults with that of repayment. If the costs of defaults outweigh the coasts of repayment, then Tom will choose to repay the loan.

The following table lists the costs of repayment and default. If W=$100,000, please fill in the table based on the description above:

	Cost if he pays	cost if he defaults
Direct payment
Collatoral loss
Jail
Seizure of profits
Total

There is a cutoff point "pi" .If W>(or equal to) "pi",Tom will choose to repay the loan; If W<"pi" ,Tom will choose to default. What is the value of "pi"?