The Internal rate of return (IRR) refers to the compound annual rate of retum that a project generates based on its us-front cost and subsequent cash flows. Consider this case than Lama Mining Company is evaluating a proposed capital budgeting project (project Delta) that will require an initial investment of $1,500,000 Blue Lama Mining Company has been basing capital budgeting decisions on a project's NPV; however, is new co wants to start using the IRR method for capital budgeting decisions. The Cro says that the IRR a better method because percentages and returns are easier to understand and to compare to regaired returns. Blue Llama Mining Company's WACC - 10, and project Delite 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 $275,000 Year 2 $400,000 Year) $500,000 Year 4 $400,000 Which of the following is the correct calculation of project Deita's IRRY 1.58% O 1.8 2.14% 1.95% 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 not change. The IRR would decrease The IRR would increase