Problem 1. Music Company is considering investing in a new project. The project will need an initial investment of $2,400,000 and will generate $1,200,000 (after-tax) cash flows for three years. Calculate the NPV for the project if the cost of capital is 15%. Would you invest in a new project? Problem 2. A firm with a WACC of 10% is considering the following mutually exclusive projects: 0 1 2 3 4 5 H + + + Project 1 - $200 $75 $75 $190 $190 Project 2 - $650 $250 $250 $125 $125 $125 Which project would you recommend? Explain. $75