Part 2. Final Answers go on the first page. (NPV questions worth 10 points, IRR questions worth 5 points) Only plug-in one final net cash-flow for each time period. 2.1 Commercial Real Estate Investment Bob buys a property that costs $1,000,000. Bob will own the property for two years. The NOI from the property for years 1-3 is to the right: Year NOI 100,000 Bob will sell the property at the end of year 2 at a cap rate that is 250 basis points lower 2$105,000 than the cap rate at which he bought the property. $110,000 (2.1.a) Assume Bob does not use leverage. Carefully write out the NPV of Bob's investment as a function of a general annual discount rate i. (2.1.b) What is Bob's annualized IRR for the investment in question 2.1.a? (2.1c) Assume Bob finances his purchase with a 50% LTV Fixed Rate IO loan at an annual rate of 5% with annual compounding and annual payments. Carefully write out the NPV of Bob's investment as a function of a general annual discount rate i: (2.1.d) What is Bob's annualized IRR for the investment in question (2.1.07