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Bob is considering buying a home and selling it in one year. Att it will cost him $100,000 to buy the home. Att he will

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"Bob is considering buying a home and selling it in one year. Att it will cost him $100,000 to buy the home. Att he will sell it for $150,000. Buying transaction costs (at t=0) are 5 of the purchase price, and selling transaction costs (atte) are 8% of the sale price. Note: each time period is a year. Write out the Net Present Value function for Bob s investment for a general annual discount rate i. Plug all of the numbers you can into the function Sample Answer: NPVC) -100. (51(1+i1 105/(1+i) 2" TTT Arial 3 (12) T-EE "Bob is considering buying a home and selling it in one year. At to it will cost him $100,000 to buy the home. Att he will sell it for $150,000. Buying transaction costs (attro) are 5% of the purchase price, and selling transaction costs (att-1) are 8% of the sale price. Note: each time period is a year. Write out the Net Present Value function for Bob s investment for a general annual discount rate i Plug all of the numbers you can into the function Sample Answer: NPVCI=-100 (5)/(1+iX1 +105/(1+y^2" TTT Arial 3(12pt) TES

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