### Calculate cost of capital; Find NPV, IRR; which project should a firm select?

Problem 1 A firm has a capital structure which consists of 30% debt and 70% equity. The cost of debt is 10% and the cost of equity is 15%. Find the cost of capital if the firm's tax rate is 34%. Problem 2 A firm is evaluating a project with the following cash flows: Year0 = (100,000) Year1 = 26,000 Year2 =