Problem 2: Corprate Financing with Collateral. Consider entrepreneur i en- dowed with a business where investment / generates stochastic revenue equal I with prob- ability p; and 0 with probability 1 -p;. The business has positive expected net value: PR > I The entrepreneur has no wealth at the beginning and needs to finance such investment with a loan from a competitive lender. Both the entrepreneur and the lender are risk-neutral. The lender makes zero expected profit on any loan. a. What is the repayment promised to the lender if project is succesful? Now, assume there are two types of entrepreneurs: good, for whom probability of success is p such that p/ > / and bad for whom probability of success is q such that qR qR-130 Consider situation where borrowers are endowed with collateral that may be turned over to lender upon termination of their project. Any amount of collateral can be pledged. Collateral loses value when taken by lender: if a borrower hands over colleteral of value c, lender collects value Be, where 0