Use the following information to answer the questions below (note, same numbers used in multiple questions):

Current (t=0) Values (known for certain) E0(CF1) = $1,200,000, V0 = $10,000,000

Possible Future Outcomes are risky (next year, t=1)

Pessimistic scenario (50% chance)

CF1 = $700,000 V1 = $8,500,000

Optimistic scenario (50% chance)

CF1 = $1,600,000 V1 = $12,500,000

Optional Loan Available (annual interest-only payments)

Loan = $7,000,000 Interest Rate: 9%

a. Using no leverage, what is the total return under the Pessimistic scenario?

b. Using no leverage, what is the income return under the Pessimistic scenario?

c. Using no leverage, what is the appreciation return under the Pessimistic scenario?

d. Using no leverage, what is the income return under the Optimistic scenario?

e. Using no leverage, what is the appreciation return under the Optimistic scenario?

f. Using the optional loan, what is the income return under the Pessimistic scenario?

g. Using the optional loan, what is the appreciation return under the Pessimistic scenario?

h. Using the optional loan, what is the income return under the Optimistic scenario?

i. Using the optional loan, what is the appreciation return under the Optimistic scenario? If the optional loan is used, what type of leverage is being produced?