Question: Diversified Holdings has three subsidiaries each of which borrows funds
Diversified Holdings has three subsidiaries, each of which borrows funds from the parent company and has a different success rate with the projects it undertakes. Subsidiary A is successful with its projects 80% of the time, Subsidiary B gets it right 93% of the time, Subsidiary C 75% of the time, and Subsidiary D 85% of the time. What loan rates should Diversified Holdings charge each subsidiary for loans?
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