Hip Hop Tunes is an internet-based subscription music club offering subscribers hip hop music 24/7. The...

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Hip Hop Tunes is an internet-based subscription music club offering subscribers hip hop music 24/7. The company would like to take advantage of the recent popularity of Heavy Metal and would like to expand their operations to include this music in their offerings. - The company has a required return of 15%. The initial investment is for $300,000 in computer equipment that can be depreciated using the MACRS 5-year schedule (20%, 32%, 19.2%, 11.52%, 11.52% and 5.76%). There is a small investment into working capital of $30,000. Initial price is $12.00 per subscriber and the firm expects first year subscribers to total 10,000, and subscriber growth to increase by 2,000 for the two years that follow (years 2&3). For years 4&5, the firm expects subscriber growth to decrease by 4,000 each year (years 4&5). The project will be terminated after year 5. The firm will incur $50,000 in fixed expenses for each of the five years the project is active. At the end of year 5, the firm will sell the equipment for $45,000 and liquidate the current level of working capital of $40,000. The firm has a tax rate of 25%. 1. Calculate the initial investment. 2. Calculate the operating cash flows for years 1-5. 3. Calculate the terminal value of the project. 4. Calculate the Net Present Value of the project. 5. Make a recommendation to the firm if it should proceed or not and provide reasoning for your answer. SHOW ALL OF YOUR WORK AND HOW YOU ARRIVED AT EACH CALCULATION. Hip Hop Tunes is an internet-based subscription music club offering subscribers hip hop music 24/7. The company would like to take advantage of the recent popularity of Heavy Metal and would like to expand their operations to include this music in their offerings. - The company has a required return of 15%. The initial investment is for $300,000 in computer equipment that can be depreciated using the MACRS 5-year schedule (20%, 32%, 19.2%, 11.52%, 11.52% and 5.76%). There is a small investment into working capital of $30,000. Initial price is $12.00 per subscriber and the firm expects first year subscribers to total 10,000, and subscriber growth to increase by 2,000 for the two years that follow (years 2&3). For years 4&5, the firm expects subscriber growth to decrease by 4,000 each year (years 4&5). The project will be terminated after year 5. The firm will incur $50,000 in fixed expenses for each of the five years the project is active. At the end of year 5, the firm will sell the equipment for $45,000 and liquidate the current level of working capital of $40,000. The firm has a tax rate of 25%. 1. Calculate the initial investment. 2. Calculate the operating cash flows for years 1-5. 3. Calculate the terminal value of the project. 4. Calculate the Net Present Value of the project. 5. Make a recommendation to the firm if it should proceed or not and provide reasoning for your answer. SHOW ALL OF YOUR WORK AND HOW YOU ARRIVED AT EACH CALCULATION.