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Your borrowing rate is 15% per year. Your lending rate is 10% per year. The project costs $5000 and has a rate of return of
Your borrowing rate is 15% per year. Your lending rate is 10% per year. The project costs $5000 and has a rate of return of 12%.
1. Should you take the project if you have $2000 to invest?
2. Briefly discuss the concept of market imperfections in the context of this question.
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