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Consider an investment with an initial purchase price of $110,000 and the following cash flows: Y1 Y2 Y3 Y4 Operating Cash Flow $ 5,000 $
Consider an investment with an initial purchase price of $110,000 and the following cash flows:
Y1 | Y2 | Y3 | Y4 | ||
Operating Cash Flow | $ 5,000 | $ 10,000 | $ 12,000 | $ 15,000 | |
Residual Proceeds | $ - | $ - | $ - | $ 120,000 | |
Total | $ 5,000 | $ 10,000 | $ 12,000 | $ 135,000 |
What is the IRR as partitioned between Operating Cash Flow and Residual Proceeds, respectively?
A. 70%/30%
B. 72%/28%
C. 28%/72%
D. 30%/70%
Which return profile is most risky?
A. Investment A
B. Investment B
C. Investment C
D. Investment D
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