the Part III. Show some work in some questions. Partial credit possible in Q 15, 17, 18. 12 points each) 15. Acme is considering developing an office building and selling it in the future They forecast: At year 0 it will cost them $500,000 to buy the land At year 1 it will cost them $600,000 to develop At year 2 it will cost them $700,000 to develop At year 3 theywill sell it for $2,500,000 Write the NPV formula for this investment for a general discount rate r. Plug all of the numbers into the formula. Write only your final answer (NPV formula), not intermediate calculations, on the FIRST page. 16. Find IRR for the investment in Q15 using financial calculator. Write only your final answer (one number) on the FIRST page 17. You observe 4% yield on a 3-month treasury bill and 6% yield hypothesis holds, what is the expected yield on a synthetic 9-month CMT 3 months from now. All interest is compounded quarterly. Hint: first convert rates to quarterly, then convert the answer to annual. Write only your final answer (one number) on the FIRST page. 1-year treasury bond. If the expectations on a 18. Bob is considering buying a home and selling it in one year. At t=0 he buys a house, the price is $100,000. At t=1 the house appreciates (i.e. the price goes up) by 20%, and Bob sells it. Bob also pays transaction costs: buying costs are 5% of buying price, selling costs are 8% of selling price. Each time period is a year. Bob does not take any mortgages Write the NPV formula for this investment for a general discount rate r. Plug all of the numbers you can into the formula and simplify expression. Write only your final answer (NPV formula) on the FIRST page. so that each year's CF is one number, not 19. Find the IRR of Bob's investment in Q18 using pen, paper, and arithmetic functions of a calculator (finan or regular one), but NOT financial functions of a financial calculator. Write your intermediate calculations your final of your formulas will be IRR = some answer on the FIRST page. Make sure it is clear from the calculations how you got the answer. expression with numbers only =final answer (one number)