A firm is considering the purchase of machinery. The initial cost of the machinery is

$50 million. The firm expects the machinery to generate a cash flow of $7 million

one year from today. Starting in year 2, the firm expects each annual cash flow to be

3.29% more than the cash flow in the previous year. The cash flows are expected to

continue forever. This disount rate applicable to this project is 7.98% per year compounded annually. What is the internal rate of return for this project and should the project be accepted? Round all intermediate calculations to 6 decimal points Your final answer for the internal rate of return should be within 0.05% of the

internal rate of return indicated in the correct answer choice.

a. The internal rate of return is 6.64% and the project should be accepted.

b. The internal rate of return is 14.00% and the project should be accepted.

c. The internal rate of return is 17.29% and the project should be accepted.

d. The internal rate of return is 14.00% and the project should be rejected.