A project requires an initial investment of $1.2 million. It expects to generate a perpetual cash flow. The first year cash flow is expected at $100,000. The cash flows are then expected to grow at 1.25% forever. The appropriate cost of capital for this project is 11%. What is the project's IRR and should it be accepted based on the IRR rule?

Group of answer choices

IRR is 9.6%; project should not be accepted

IRR is 9.6%; project should be accepted

IRR is 11.6%; project should not be accepted

IRR is 11.6%; project should be accepted

IRR is 10.6%; project should be accepted

IRR is 10.6%; project should not be accepted