A commercial bank is planning to offer Luna a loan in the amount of $15,000 and the bank figures that Luna will repay the loan in full with probability 0.79 and default otherwise. Also, Luna has asked for an interest rate of 12%. In order for the bank to be able to offer this rate, what is the collateral amount that Luna must offer the bank in the event of default? $8,177.5 $8,228.6 $8.366.9 $8.401.1

ECON MICRO
5th Edition
ISBN:9781337000536
Author:William A. McEachern
Publisher:William A. McEachern
Chapter13: Capital, Interest, Entrepreneurship, And Corporate Finance
Section: Chapter Questions
Problem 4.8P
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A commercial bank is planning to offer Luna a loan in the amount
of $15,000 and the bank figures that Luna will repay the loan in
full with probability 0.79 and default otherwise. Also, Luna has
asked for an interest rate of 12%. In order for the bank to be
able to offer this rate, what is the collateral amount that Luna
must offer the bank in the event of default?
O $8,177.5
$8,228.6
$8.366.9
O$8,401.1
Transcribed Image Text:A commercial bank is planning to offer Luna a loan in the amount of $15,000 and the bank figures that Luna will repay the loan in full with probability 0.79 and default otherwise. Also, Luna has asked for an interest rate of 12%. In order for the bank to be able to offer this rate, what is the collateral amount that Luna must offer the bank in the event of default? O $8,177.5 $8,228.6 $8.366.9 O$8,401.1
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