Universal Bank has made a one-year loan to Minion Ltd, a firm that manufactures toy blocks. The estimated probability of default of this

loan is 8%. The bank has also made a two-year loan to Minion Ltd that provides a return of 12.6% per annum if the loan is not defaulted.

And the bank will lose all the claims on principal and interests upon loan default. The yield is 2% per annum for the 1-year maturity

government bond. Based on the prices of 1-year and 2-year maturity government bond prices, the forward rate for the 2nd year is 4% per

annum.

What is the cumulative probability of repayment (i.e. not default) of Minion Ltd over the two years?

(Please round your answer to at least 3 decimal places in decimal points, not percentage terms.)