Below are some estimates for a proposed project to upgrade a manufacturing line. o O O Total $325,000 equipment investment where $200,000 is needed at the start of the project and $125,000 1 year after Improved productivity due to upgrade Year 1: $85,000 Year 2: $200,000 Year 3: $300,000 Year 4: $400,000 Year 5: $500,000 Salaries: $30,000 annually Maintenance: $20,000 increasing by 5% per year Income tax: 25% for each year the project has a positive pretax cash flow (if the pretax cash flow is negative, no income taxes need to be paid) Equipment sale: The useful life of the upgraded line is estimated to be 5 years. The equipment is sold for $100,000 at the end of its useful life O 2a. Lay out the yearly cash flows. Label each component on a different line. In addition, include the following subtotals in your cash flows. Pretax income (from which you'll calculate any income tax) Net cash flow (after income tax) Cumulative cash flow 2b. Using the payback model, calculate the payback for this project. For full credit, if your payback is between years - example: between 6 & 7, calculate the exact value expressed either in decimal points or years + weeks or months. 2c. What is the net present value of this project using an 7% discount rate? 2d. Is the internal rate of return (IRR) of this project higher or lower than the discount rate? 2e. Draw a graph that illustrates your answer showing the relationship between NPV and the discount rate using the information from 2C and 2D