Consider the case of Krause Manufacturing: Krause Manufacturing is evaluating a proposed capital budgeting project that will require an initial investment of $108,000. The project is expected to generate the following net cash flows: Year Year 1 Cash Flow $35,800 $50,200 Year 2 Year 3 $44,100 $40,400 Year 4 Assume the desired rate of return on a project of this type is 10%. What is the net present value of this project? (Note: Do not round your intermediate calculations.) - $26,579.10 $26,759.78 $23,914.50 $4,725.40 Suppose Krause Manufacturing has enough capital to fund the project, and the project is not competing for funding with other projects. Should Krause Manufacturing accept or reject this project? Reject the project O Accept the project Blue Llama Mining Company is evaluating a proposed capital budgeting project (project Delta) that will require an initial investment of $1,500,000 Blue Llama Mining Company 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 Llama Mining Company's WACC is 3%, and project Delta has the same risk as the firm's average project. The project is expected to generate the following net cash flows: Year Year 1 Year 2 Cash Flow $300,000 $425,000 $475,000 $450,000 Year 3 Year 4 Which of the following is the correct calculation of project Delta's IRR? 3.14% 3.69% 3.32% 4.06% 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? The IRR would increase. The IRR would decrease. The IRR would not change