Suppose your friend Jerald has created the next trendy iPad game, but he is burned out and wants to take a 3-year vacation. He wants to sell you his game while he is unplugged from civilization. His game generates $4,000 in sales per year (assume those cash flows will be the same for the next 3 years), and when he gets back, he wants to repurchase the game from you for $100,000. You think that the risk is such that the discount rate should be 8%. Since you want to give your friend Jerald a fair price, you set the price so NPV=0. (a) Calculate how much should you pay Jerald for his game? (10 marks) (b) Suppose Jerald wants to sell you the game for $100,000. Explain your decision about buying the game or not? Calculate the NPV? (7.5 marks) (c) Suppose Jerald changes his offer such that he wants to sell you the game and not repurchase it. You expect the sales to stay at $4,000 forever. Evaluate the price you would be willing to pay him so that the project has NPV=0 ? ( 7.5 marks)