Problems with the IRR method Acme Oscillators is considering an investment project that has the following rather unusual cash flow pattern.

Year CFt

$0$ $$100$

$1-460$

$2791$

$3-602\mathrm{.}6$

$4171\mathrm{.}6$

$($a$)$ Calculate the project's NP at each of the following discount rates: $0\%,5\%,10\%,20\%,30\%,40\%,50\%.$

$($b$)$ What do the calculations tell you about this project's IRR? The IRR rule tells managers to invest if a project's IRR is greater than the cost of capital. If Acme Oscillators' cost of capital is $8\%,$ should the company accept or reject this investment?

$($c$)$ Notice that this project's greatest NPVs come at very high discount rates. Can you provide an intuitive explanation for that pattern?

$($d$)$ If Acme Oscillators' cost of capital is $8\%,$ should the company accept or reject this investment based on MIRR?