Consider a firm owned by two shareholders, Sarah Dandridge and Peter Burke. Each owns fifty percent of the firm's equity.
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2. Consider a firm owned by two shareholders, Sarah Dandridge and Peter Burke.

Each owns fifty percent of

the firm's equity. The firm has a project available to it that costs $60,000 and has a payoff of $90,000. The opportunity cost of capital for both shareholders is 15%. Sarah has wealth now of $25,000 and Peter has wealth now of $50,000. What is the most each can consume now given they can lend and borrow as much as they want at 15%?

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