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 this case: Blue Llama Mining Company is evaluating a proposed capital budgeting project (project Delta) that will require an initial investment of 51,500,000 Blue Llama Mining Company has been basing capital budgeting decisions on a project's NPV; however, its new CFO wants to start using the 1RR method for capital budgeting decisions. The CFO says that the IRR. is a better method because percentages and returns are easier to understand and to compare to required returns. Dlue Lama Mining Company's WACC is 6%, and project Delta has the same risk as the firm's average project. The project is expected to generate the following net cash flows: Which of the following is the correct calculation of project Delta's IRR? 1.86%1.77%2.14%1.95%