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 $129,000. Rental rates are not expected to change going forward. In addition to using the warehouse, the project requires an up-front investment into machines and other equipment of $1.4 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 $474,000. Finally, the project requires an initial investment into networking capital equal to 10 percent of predicted first-year sales. Subsequently, net working capital is 10 percent of the predicted sales over the following year. Sales of protein bars are expected to be $4.7 million in the first year and to stay constant for eight years. Total manufacturing costs and operating expenses (excluding depreciation) are 80 percent of sales, and profits are taxed at 30 percent. If the cost of capital is 15%, what is the NPV of the project?

Note: There are 4 parts to complete this problem.1. Compute the initial free cash flow (FCF) of the project. 2. Compute the FCF in years 1 through 7 of the project. 3. Compute the FCF in year 8 of the project. 4. Compute the NPV of the project from the FCF.

The NPV of the project is million. (round to three decimal places.)