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The internal rate of return (IRR) refers to the compound annual rate of return that a project generates based on its up. front cost and subsequent cash flows. Consider this case: Blue Hama Mining Company is evaluating a proposed capital budgeting project (project Delta) that will require an initial imvestment of $1,500,000. Dlue thama 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 capltal budoeting declsices, 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 7%, and project Delta has the same risk as the firm's average project. The project is expected to generate the following net cash flons: Which of the following is the correct calculaticn of vrofect Delta's IfRe? 3.7454 4.304 4.115 The project is expected to generate the following net cash flows: Which of the following is the correct catculation of project Delta's tRR? 3.74% 4.30% 4.11% 4.4945 If this is an independent project, the IRR method staten that the firm should. If the project's cost of cacital were to increase, how would that affect the IR! The IRR would increase: The InR would decrease. The IRR would not change. easter to understand and to compare to recuired foturns. Rlum Itama Mining Company's wakC is 7 Wh, and project. Delta has the same disk as the firmis average prolect. The project is expected to generate the following net cash flows: Which of the following is the correct calcalation of project Delta's IRR? 3.7495 4.30% 4.114 4.49% If this is an independent project, the 1AR 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 iRa would decrease. The lig would not change