The internal rate of return (IRR) refers to the compound annual rate of retum that a project generates based on is up-froek cast and sulptecutit cash flows. Consider the case of Fakon Freight: Falican Freight is evaluating a proposed capital budgetiro project (project Sigma) that wal reguire an initial investment of sbop, oco method for capital budgeting decisions, The CFO says that the LRR is a better method because feturfs in pertentage form are easier te uncerstand and compare to required recurns. Facon Freight's wACC is Th, and project sigma has the same nsk as the firm's average peoject. The project is expected to generate the fellowing net cash fows: Which of the following is the correct calculation of project Sigma's IRR? 24.87% 31.09\% 27.98% 26.43% If this is an independerk project, the IRR method states that the firns should If the project's cost of capital aere to increase, how woald that aflect the IRR? The trep wouls not change. The IRR would increase. The IRR would decrease