Problems with the IRR method Acme Oscillators is considering an investment project that has the

following rather unusual cash flow pattern.

a$.$ Calculate the project's NPV 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?