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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

Please show works.

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