Finish attempt- Marked out of 6.00 Rag question ellook Print Weighted Average Cost of Capital and Net Present Value Analysis Manchester Company is considering a proposal to purchase special equipment at a cost of $680,000. The equipment will be useful for five years and has an expected 170.000 salvage value Manchester expects annual savings in cash operating expenses (before taxes) of $240,000. For tax purposes, the annual depreciation deduction will be as follows salvage value is ignored on the tax return Year 1 $85,000 Year 2 170,000 Year 3 170,000 Year- 170,000 Years 85,000 The income tax rate is 40% Manchester establishes a hurdle rate for a net present value analysis at the company's weighted average cost of capital plus 2 percentage points. Manchester's capital is provided in the following proportions: debt, 70%: common stock, 20% and retained earnings. 10%. The cost rates for these capital sources are debt, 8% common stock, 12% and retained earnings. 10% a. Compute Manchester's (1) weighted average cost of capital and (2) hurdle rate. Round answers to one decimal place. For example, 0.4567 45.7% Debt Common stock Retained eamings Weighted Average Cost of Capital 0% 0% 0 (1) Weighted avg, cost of capital (2) Manchester's cut off rate 0% 0% b. Using Manchester's hurdle rate, compute the net present value of this capital expenditure proposal