1. Business
  2. Finance
  3. kotak private equity discovery fund is considering loans of 10000...

Question: kotak private equity discovery fund is considering loans of 10000...

Question details

Kotak Private Equity Discovery Fund is considering loans of 10,000 each to 50 entrepreneurs. The loans are due in 3 years, and are to be paid off by one payment of principal and accumulated interest on the due date. The Fund wishes to earn a minimum 12% annual return on the overall entrepreneur loan portfolio. For the 50 person group, the Fund projects that 2 will default on the loan with no recovery, and another 2 will default with a 50% recovery of the amount due. Find the effective annual interest rate that the Fund must charge in order to meet its target return.

Solution by an expert tutor
Blurred Solution
This question has been solved
Subscribe to see this solution