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Assume a new project requires an initial investment of $10million dollars, with ensuing cash flows of $2, $4 and $5 millionin years 1, 2 and 3. Assuming the company's WACC is 10%, which ofthe following statements is true?a. The firm should reject the project, as the IRR is lower thanthe WACC.b. The firm should accept the project, as the IRR is higher thanthe WACC.c. The firm should accept the project, as the NPV ispositive.d. The firm should accept the project, as the NPV isnegative.e. None of these statements are true.
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