1. A video rental store will cost $650,000 to open. Assuming annual sales of $1 million, variable costs of 35%, fixed costs of $300,000, depreciation of $100,000, and a tax rate of 35%, calculate the NPV of the project over a 5-year horizon (no inflation or salvage value assumed) with a 12% cost of capital. Now, suppose there is another project available, which will require the same amount of initial investment as the video rental store. The revenue it can generate in the first year is $800,000, and it will be growing at a rate of 5% every year for 5 years till the project expires. The costs as well as the depreciation associated with this new project will be exactly the same as the video rental store. Which project will you take if they are mutually exclusive?