Bob Has $1,000,000 of His Own Equity Capital Available to Make

Multiple Choice

Bob has $1,000,000 of his own equity capital available to make a real estate investment. He finds a bargain, a property with a market value of $1,100,000 that he can buy for $1,000,000. By how much can he enhance the market value of his net wealth by leveraging his purchase of this bargain property using borrowed money from a bank to finance 50% of his investment?

A) None. Conceptual question: NPV(fin) = 0 from MV perspective unless subsidized int. rate.
B) $50,000.
C) $100,000.
D) $200,000.
E) By 50%.