Suppose you are offered $8,700 today but
must make the following payments:
Year                      Cash Flows
0 ...........................  $ 8,700
1 ..........................    −3,900
2 ..........................    −2,900
3 ..........................    −2,300
4 ..........................    −1,800

a. What is the IRR of this offer?

b. If the appropriate discount rate is 10 percent, should you accept this offer?

c. If the appropriate discount rate is 20 percent, should you accept this offer?

d. What is the NPV of the offer if the appropriate discount rate is 10 percent? 20 percent?

e. Are the decisions under the NPV rule in part (d) consistent with those of the IRR rule?