Blue Pencil Publishing is evaluating a proposed capital budgeting project (project Delta) that will require an initial investment of $1,500,000. Blue Pencil Publishing 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 percentages and returns are easier to understand and to compare to required returns. Blue Pencil Publishing's WACC is 7%, and project Delta 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 Delta's IRR? Year Cash Flow Year1 $325,000 Year 2 $450,000 Year 3 $400,000 Year 4 $475,000 0 4.30% o 4.49% 0 3.74% 0 3.37% If this is an independent project, the IRR method states that the firm should If the project's cost of capital were to increase, how would that affect the IRR? O The IRR would increase. O The IRR would not change. O The IRR would decrease