Blue Pencil Publishing is evaluating a proposed capital budgeting project (project Deita) that will require an initial investment of $1,450,000. Blue Pencil Publishing has been basing capital budgeting decisions on a project's NPV: however,its new Cro weants 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 996, 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 Year 1 $275,000 Year 2 $400,000 Year 3 $450,000 Year 4 $425,000 0 2.17% O 2.04% O 2.55% 2.68% reject project Delta accept project Delta If the project's cost of capital were to increase, how would that affect the IRR The IRR would not change. O The IRR would increase. O The IRR would d se