Question: Please show work and help solve this finance problem This problem considers the risk and return on your investment if you purchase a house today

Please show work and help solve this finance problem
Please show work and help solve this finance problem This problem considers

This problem considers the risk and return on your investment if you purchase a house today for $100,000 and sell it in one year. Assume that the price you expect to be able to sell the house for next year is $110,000. a. Suppose you pay use cash to pay for the house ( $100,000 cash outlay today). (i) What is the expected rate of return on your $100,000 investment? (ii) What rate of return would you earn on your $100,000 investment if you were able to sell the house next year for $120,000. (iii) What rate would you earn if you were only able to sell the house for $80,000. b. Suppose you borrowed $80,000 and put up $20,000 of your own money to purchase the house. (For simplicity assume the interest rate charged on the $80,000 loan was 0%, i.e., you only need to repay the $80,000.) (i) What is the expected rate of return on your $20,000 investment? (ii) What rate of return would you earn on your $20,000 investment if you were able to sell the house next year for $120,000. (iii) What rate would you earn if you were only able to sell the house for $80,000

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