You are acquiring an apartment building at the beginning of the current year for $1 million at a 7.5% cap rate and financed with 75% interest only debt at 5% and 25% equity investment. The net operating income increases by 3.5% each year and the property will be sold at the end of five years at the going in cap rate. What is the internal rate of return before debt on the investment?

a. 11%

b. 12.7%

c. 7.5%

d. 25%