Falcon Freight is evaluating a proposed capital budgeting project (project Delta) that will require an initial investment of $1,600,000. The 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. Falcon Freight's WACC is 10%, 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 Cash Flow Year 1 $375,000 Year 2 $500,000 Year 3 $450,000 $475,000 Year 4 Which of the following is the correct calculation of project Delta's IRR? 3.79% O 5.21% 4.74% O 5.69% If this is an independent project, the IRR method states that the firm should project Delta. If the project's cost of capital were to increase, how would that affect the IRR? O The IRR would increase. The IRR would decrease. The IRR would not change