Why in this question we accept the project even if the IRR was 7.27% and the equired return is 9%.

which is mean IRR less than equired return.

Is that has something to do with the prepaid basis??

98. Motor City Productions sells original automotive art on a prepaid basis as each piece is uniquely designed to the customer's specifications. For one project, the cash flows are estimated as follows. Based on the internal rate of return (IRR), should this project be accepted if the required return is 9 percent?

Year 0 cash flow = $5,500

Year 1 cash flow = -$5,900

A. Accept the project.

$5,500 - $5,900/(1 + IRR) = 0; IRR = 7.27 percent