A mining company is considering investing in a low-grade placer deposit of gold ore. The project will require $22 million initial investment and is expected to generate profits of $5 million per year for 6 years, starting from year 1. The company's estimated cost of capital is 7%. Based on the IRR rule, should the company accept or reject the project? Accept the project, because the IRR of 4.42% is lower than the cost of capital of 7\%. Reject the project, because the IRR of 9.65% is higher than the cost of capital of 7\%. Accept the project, because the IRR of 9.65% is higher than the cost of capital of 7\%. Reject the project, because the IRR of 4.42% is lower than the cost of capital of 7% A fast-food restaurant chain is considering spending $550,000 to install donut makers in all of the restaurants. This investment is expected to increase cash flows by $80,000 in year 1,$90,000 in year 2 , and $140,000 per year in years 3 to 5 . If the cost of capital is 8%, should the restaurant chain invest in donut makers? Yes, because NPV of the investment =$89,443 Yes, because NPV of the investment =$40,000 No, because NPV of the investment =$82,818 No, because NPV of the investment =$89,443