Suppose Annie Expects an Annual Return of $520 from an Investment

Multiple Choice

Suppose Annie expects an annual return of $520 from an investment worth $500.What should be the rate of interest charged by her to a risky borrower who is likely to repay the principal and interest with a probability of 0.7?

A) 45 percent
B) 48.6 percent
C) 20.33 percent
D) 53.4 percent