Arnold Inc. is considering a proposal to manufacture high$-$end protein bars used as food supplements by body builders.

The project requires use of an existing warehouse, which the firm acquired three years ago for $$2$ million and which it

currently rents out for $$111,000.$ Rental rates are not expected to change going forward. In addition to using

the warehouse, the project requires an upfront investment into machines and other equipment of $$1\mathrm{.}4$ million. This

investment can be fully depreciated straight$-$line over the next $10$ years for tax purposes. However, Arnold Inc. expects to

terminate the project at the end of eight years and to sell the machines and equipment for $$437,000.$ Finally, the project

requires an initial investment into net working capital equal to $10\%$ of predicted first$-$year sales. Subsequently, net

working capital is $10\%$ of the predicted sales over the following year. Sales of protein bars are expected to be $$4\mathrm{.}9$

million in the first year and to stay constant for eight years. Total manufacturing costs and operating expenses $($excluding

depreciation$)$ are $80\%$ of sales, and profits are taxed at $30\%.$

a$.$ What are the free cash flows of the project?

b$.$ If the cost of capital is $15\%,$ what is the NPV of the project?