Liam bought a piece of equipment for $10,000. He paid $3,000 for upgrades during year 1 and the equipment generates $2,000 in cash flow for year 1. In year 2 the equipment generated $3,000 and in year 3 it generated $4,500, but Liam sells it for $6,000 and pays a $500 commission. What is his IRR?

a. 3.4%.

b. 3.9%.

c. 4.4%.

d. 4.9%