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 subseguent cash flows. Consider the case of Blue Lama Ming Company But Lama pening Company is evaluating a proponed capical budgeting project (project Sign) that will requires in investment of $750,000 the many has been base al budgeting decision on projects NIV; however, its new CFO wants to starting the TR method for at ting on the CFO says that the themed besturin per formare understand and was eguire return the maring Compe WACC 10, ant project Siomas the same risk astir Drect. The bedreded to rate towing nettshows * Y Cash Flow 110,000 17.00 75,000 00 wach the theme of a 38.55 41.00 Yew Cash Fium 90,000 V. . * Which of the following the connections 4 handed them I mean yster mother them the 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 Lama Mining Company: Blue Liama Mining Company is evaluating a proposed capital budgeting project (project Sigma) that will require an initial investment of $750,000 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 capita budgeting decisions. The CFO says that the IRR is a better method because returns in percentage formare enter to understand and compare to required returns. Blue Lama Mining Company's WACC IS 10%, and project Sipma has the same risk as the firm's average project. The project is expected to generate the following met enth flows: YAN Year 1 Year 2 Cash Flow $350,000 1475,000 5400,000 1475,000 Year Dry Which of the following is the correct calculation of project Sigma TRR? 36.90% 38.95 41.00 Which of the following is the correct calculation of project Sigma's IRR? 36.90% 38.95% 32.80% 41.00% If this is an independent project, the IRR method states that the firm should project Sigma It mutually exclusive projects are proposed that both have an IRR greater than the necessary WACC, the IRR method states that the firm should accept: the project with the greatest IRR, assuming that both projects have the same risk as the firm's average project. the project with the greater future cash inflows, assuming that both projects have the same risk as the firm's average project the project that requires the lowest initial investment, assuming that both projects have the same risk as the firm's average project