Question: Solve Problem 1 Suppose that R1 = R2 = 10, p=0.6, L = 2, A=0, I = 4. 1. Set y = 1 and yo

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Solve Problem 1 Suppose that R1 = R2 = 10, p=0.6, L

Problem 1 Suppose that R1 = R2 = 10, p=0.6, L = 2, A=0, I = 4. 1. Set y = 1 and yo = 0. Find the repayment D that maximizes borrower's profits. Calculate borrower's profits. 2. Choose y and yo and D to maximize borrower's profits. Calculate borrower's profits. Problem 1 Suppose that R1 = R2 = 10, p=0.6, L = 2, A=0, I = 4. 1. Set y = 1 and yo = 0. Find the repayment D that maximizes borrower's profits. Calculate borrower's profits. 2. Choose y and yo and D to maximize borrower's profits. Calculate borrower's profits

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