Q 1. Suppose the net present value (NPV) of project A is +$100 and that of project B is +$60. Assuming projects A and B are independent, then the net present value of the combined projects is 2. The IRR is defined as 3. 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 3 years beginning 1 year after investment. Calculate the NPV for the project if the cost of capital is 15%. 4. Muscle Company is investing in a giant crane. It is expected to cost $6.5 million in initial investment, and it is expected to generate an end-of-year cash flow of $3.0 million each year for 3 years. Calculate the IRR. 5. A project's internal rate of return depends on its level of risk.

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