2. Internal rate of return (IRR) The internal rate of refurn (IRR) refers to the compound annual rate of return that a project generates based on its up-front cost and subsequent cash fows, Consider the case of Blue Llama Mining Company: Blve Lama Mining Company is evaluating a proposed capital budgeting project (project sigma) that will require an intial investment of $750,000. Blue Lama Mining Company has been basing capital budgeting decisions on a project's NPV; however, its new CFO wants to start using the IRR method for capital budgeting decisions. The CFO says that the IRR is a better method because returns in pertentage form are easier to understand and compare to required returns. Blue Uama Mining Companr's WACC is 10\%, and project Sigma has the same risk as the firm's average project. The project is expected to generate the following net cash flows Which of the following is the correct calculation of project 5igma's IRR? 41.00% 47.15% 49.20% 43.05% If this is an independent project, the lar method states that the firm should If the project's cost of capital were to increase, how would that affect the IRG? The IRR would not change. The 1RR would decrease. The 1PR would increase