Ben is considering a new investment of $100,000 today (period 0). Fortunately for him, he has exactly $100k to make the investment. If made, he anticipates that it will return nothing during years 1 and 2. It will return $50k at the end of year 3, $100k at the end of year 4, and $200k at the end of year 5. Interest rates are 5%

a. What is his current wealth?

b. If he decided to sell the business right near the end of year 3, how much would it sell for? (He sells it just before the first $50k in earnings is paid, so that the new owner gets the $50k).

c. Based on his estimated wealth in a), he decides to borrow $50k against the business at the end of both years 1 and 2 (That is, the business pays Ben dividends of $50k at the end of year 1, and another $50k at the end of year 2. Since the business has no income at these points, it borrows the funds). If he decided to sell the business right near the end of year 3, how much would it sell for?

d. Going off of the setup in c), if the new owner sells the business right at the end of year 4, how much will the business sell for?

e. If the new owner sells the business right at the end of year 4, what rate of return did this owner make on the investment over the course of the year that it owned the business?