Businessa customer has approached a local credit union for a $20,000 1 year loan at a 10%

timer Asked: Oct 27th, 2014

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A customer has approached a local credit union for a $20,000 1 year loan at a 10% interest rate. If the credit union does not approve the loan application, the 20,000 will be invested in bonds that earn a 6% annual return, Without additional information, the credit union believes that there is a 5% chance that this customer will default on the loan, assuming the loan is approved. If the customer defaults on the loan, the credit union will lose $20,000. Should the credit union purchase the report if it cost $150. 

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