please show calcultions! thanks!

16,000 10,000 4,000 54,000 Vities: Net increase in cash Cash at beginning of year Cash at end of year 2. Manchester Eyewear, Inc. manufactures glasses. Manchester is considering purchasing a new piece of manufacturing equipment for $2,000,000. The equipment is expected to last 10 years, and management projects that purchasing the equipment would result in an additional $300,000 in pre-tax cash flow per year. Management does not expect the equipment to have any value at the end of 10 years, and so will fully depreciate the equipment on a straight-line basis (45 points). To obtain the funds to purchase this equipment, Manchester plans to raise capital from the following sources: $800,000 at an interest rate of 7.25% $600,000 at an interest rate of 7% $600,000 Bank Loan: Bond Financing Preferred Stock (10%) Issuance Manchester's tax rate is 20% (Continued on next page) Present value of $1: Period 0.9524 0.9070 0.8638 0.8227 0.7835 0.7462 0.9434 0.8900 0.8396 0.7921 0.7473 0.7050 0.6651 0.6274 0.9346 3 0.9259 0.8573 0.7938 0.7350 0.6806 0.6302 0.8734 0.8163 0.7629 0.7130 0.6663 0.6227 0.7107 0.6768 0.6446 0.6139 0.5835 0.5820 0.5439 0.5403 0.5002 0.4632 0.5919 10 0.5584 0.5083 Present value of an annuity of $1: Period 5% 0.9524 1.8594 2.7232 3.5460 4.3295 6% 0.9434 1.8334 2.6730 3.4651 8% 7% 0.9346 0.9259 1.8080 2.6243 3.3872 4.1002 4.7665 1.7833 2.5771 3.3121 3.9927 4.6229 4.2124 4.9173 5.5824 6.2098 6.8017 5.0757 5.7864 5.3893 5.9713 6.5152 5.2064 5.7466 6.4632 7.1078 6.2469 6.7101 10 7.7217 7.3601 7.0236 a) Using the weighted average cost of capital as the discount rate, compute the net present value of the future cash flows. You may use the present value tables above or a financial calculator to arrive at your answer. Remember to include the tax shield generated by depreciation. Please show your work for full credit. b) Should the company make the investment? Explain your answer. (Please show your work and answers on the next page) 2/34567892