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The Answer is -46.8. I just dont know how to solve it. -...

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The Answer is -46.8. I just dont know how to solve it.
- 1. Assume a firm would like to borrow $125 from a bank to invest in a project with the following possible cash flows at time 1: Probability Project cash flows 70% chance $20 30% chance $250 The firm has no "assets-in-place," and therefore will only be able to use the cash flows from the project (given above) to make payment on the loan. Assume the bank sets the interest rate on a one-year loan to this firm at 40%. Based on this 40% interest rate, what is the bank's expected return on the loan? I A. -33.3% B.-36.3% C.-37.5% D. 40.8% E. -41.9% F. 43.7% G. 45.3% H. -46.8% Copyright 2019 by John Cooney

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