18 . I'M is contemplating an average - risk investment costing $100 million and promising an annual after - tax cash flow of $15 million in perpetuity . Which of the following statements is /are correct ? 1 . I'M should reject the project because the IRR is greater than the firm's WACC . II . FM should accept the project because the IRR is greater than the firm's WACC . ILL . FM should accept the project because the NPV is greater than zero . IV . I'M should reject the project because the NPV is less than zero . A . I only B . II only C . IV only D. I and IV only E . II and III only* F . None of the above . The IRR of the investment is 15 / 100 = 15% . FM's WACC of 1 1 . 27% is shown in the table below . The NPV of the investment at the WACC = - 100 + 151 . 1127 = $33 . 1 million . Amount Percentage Weighted Source ( $millions ) of Total Cost after tax Cost Debt $ 1. 250 1 1. 500 4. 1%/0 0. 5%/0 Equity $9. 600 88.5%/0 12 . 2% 10. 8%/01 WACC = 1 1. 27%/0