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 Liama Mining Company is evaluating a proposed capital budgeting project (project Delta) that will require an initial investment of $1,600,000 Blue Lama Mining Company has been basing capital budgeting decisions on a project's NPV; however, its new CFO wants to start using the IRR 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. Blue Ulama Mining Company's WACC is 9%, and project Deita 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? Which of the following is the carrect calculation of project Delta's IRR? 2.99% 3.1746 3.7046 3.5276 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 laR would increase. The tR. would decrease. The IRR would not change