Blue llama mining company is evaluating a proposed capital budgeting project (project sigma) that will require an initial investment of $750,000.

blue llama mining company has been basing capital budgeting decisions on a project's npv; however, its new cfo wants to start using the irr method for capital budgeting decisions. the cfo says that the irr is a better method because returns in percentage form are easier to understand and compare to required returns. blue llama mining company's wacc is 10%, and project sigma 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 $350,000
year 2 $475,000
year 3 $400,000
year 4 $475,000
which of the following is the correct calculation of project sigma's irr?
a. 38.95%
b. 36.90%
c. 41.00%
d. 34.85%