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 the case of Blue 1 lama Mining Company: Blue Lama Mining Company is evaluating a progosed capital budgeting project (profect Sigma) that will require an initial investment of 5750,000 . Blue Lama Mining Company has been basing capital budgeting decisions on a project's NPY; however, its new CFO wants to start using the IRR method for capital budgeting decisions. The CFO says that the IRR is a betfer method because retarns in percentage form are. easier to understand and compare to required returns. Blue Llama Mining Cornpany's WACC is 10%, and project 5 gigma has the same: tisk as the firm's average project. The project is expected to generate the following net cash flews: Which of the following is the correct calculation of project Sigma's IRR? 40.33% 38.41% 42.25% 46.09% If this is an independent project, the 1RR method states that the firm should If the project's cost of capital were to increase, how would that affect the IRI The IRR would not change. The IRR would increase. The IRR would decrease