Problems with the IRR method Acme Oscillators is considering an investment project that has the following rather unusual cash flow pattern. Year 0 1 2 3 4 Cash Flow $100 - 462 793 -602.4 171.5 AWN 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? a. Calculate the NPV at the following discount rates for this investment: 0%, 5%, 10%, 20%, 30%, 40%, 50%. The NPV at 0% is $ (Round to the nearest cent.) The effect of tax rate on WACC K. Bell Jewelers wishes to explore the effect on its cost of capital of the rate at which the company pays taxes. The firm wishes to maintain a capital structure of 40% debt, 20% preferred stock, and 40% common stock. The cost of financing with retained earnings is 11%, the cost of preferred stock financing is 8%, and the before-tax cost of debt financing is 8%. Calculate the weighted average cost of capital (WACC) given a tax rate of 30%. The firm's WACC is %. (Round to two decimal places.)