You are introducing a new line of fashion merchandise and need to purchase equipment in order to produce the goods.You have estimated that if you purchase the equipment and produce the new line of merchandise, the new line will bring in cash flows of $400,000 a year for the next 7 years.The equipment will cost $2,000,000 "up front".After the 7 years, the equipment is expected to be worth $100,000.Your discount rate is 10%.(12pts)

a)Use the NPV method to determine whether the project should be accepted.Make appropriate calculations using Excel functions so I can see all of your work.

b)Comment on whether the investment in the new equipment makes sense under NPV.