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 $$4$ million and which it currently rents out for $$100,000.$ 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{.}50$ 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 $8$ years and to sell the machines and equipment for $$552,000.$ 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{.}80$ million in the first year and to stay constant for $8$ years. Total manufacturing costs and operating expenses $($excluding depreciation$)$ are $80\%$

of sales, and profits are taxed at $35\%.$

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?

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

The FCF for year $0$ is $$-1\mathrm{.}980$ million. $($Round to three decimal places.$)$

The FCF for years $1$ through $7$ is $$0\mathrm{.}612$ million. $($Round to three decimal places.$)$

The FCF for year $8$ is $ million. $($Round to three decimal places.$)$