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Two investments have the following pattern of expected returns: Investment A Year 1 Year 2 Year 3 Year 4 Year 4 ( Sale ) BTCF
Two investments have the following pattern of expected returns:
Investment A
Year Year Year Year Year Sale
BTCF $ $ $ $ $
Investment B
Year Year Year Year Year Sale
BTCF $ $ $ $ $
Investment A requires an outlay of $ and Investment B requires an outlay of $
Required:
a What is the BTIRR on each investment?
b If the BTIRR were partitioned based on BTCFo and BTCFs what proportions of the BTIRR would be represented by each?
c Which investment would be preferable?
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