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  • Econ Lecture 1 (Sept 9) Borrow 10m x1 5% (.05) (10m) 500,000 600,000 .05 (12m) 600,000 600,000 Pmax 600,000/.05 12m

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    Dakota Smith
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    The document discusses borrowing 10 million at an interest rate of 5% which results in interest of 500,000, less than the maximum repayment ability of 600,000. Solving the interest equation of 0.05(amount) equals 600,000 shows the maximum that can be borrowed is 12 million. It introduces a model where the maximum price equals the maximum repayment ability divided by the interest rate.

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    Econ lecture one notes

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    Econ Lecture 1

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    The document discusses borrowing 10 million at an interest rate of 5% which results in interest of 500,000, less than the maximum repayment ability of 600,000. Solving the interest equation of 0.05(amount) equals 600,000 shows the maximum that can be borrowed is 12 million. It introduces a model where the maximum price equals the maximum repayment ability divided by the interest rate.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
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    Download as docx, pdf, or txt
    15 views1 page

    Econ Lecture 1 (Sept 9) Borrow 10m x1 5% (.05) (10m) 500,000 600,000 .05 (12m) 600,000 600,000 Pmax 600,000/.05 12m

    Uploaded by

    Dakota Smith
    The document discusses borrowing 10 million at an interest rate of 5% which results in interest of 500,000, less than the maximum repayment ability of 600,000. Solving the interest equation of 0.05(amount) equals 600,000 shows the maximum that can be borrowed is 12 million. It introduces a model where the maximum price equals the maximum repayment ability divided by the interest rate.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as docx, pdf, or txt
    of 1

    Econ lecture 1 (Sept 9)

    Borrow 10m x1 5%
    (.05)(10m)=500,000<600,000
    .05(12m)=600,000=600,000
    Pmax=600,000/.05 =12m

    Model: Pmax=R/
    1.Max im willing to invest
    2. Max I can repay
    3. Equilibrium price

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