question archive You loan a friend $5,000
You loan a friend $5,000
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You loan a friend $5,000. There is a 15% chance your friend will pay you a 3% return, a 40% chance he will pay you a 2% return and a 45% chance he will pay you only a 1% return.
What is your expected return after one year?
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Answer:
| Hence, expected return after 1 year = 1.70% | |||
| Loan given to friend = $5,000 | |||
| Return = 5000 x 1.70% | |||
| 85.00 | |||
| Answer : $85 (1.7% on $5,000) |
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