Arnold Inc. is considering to manufacture high$-$end protein bars for body builders. Sales of protein bars are expected to be $$5\mathrm{.}4$ billion in the first year and to stay constant for $5$ years. Total manufacturing costs and operating expenses are $80\%$ of sales, and profits are taxed at $21\%.$

The project requires use of an existing warehouse, which is currently rented out for $$150,000$ a year.

The project requires an upfront investment into machines and other equipment of $$2\mathrm{.}0$ million. The investment can be fully depreciated straight$-$line over the next $10$ years.

The firm plans to terminate the project after $5$ years and to sell machines and equipment for $$500,000.$ The project requires an initial investment into net working capital equal to $10\%$ of predicted first$-$year sales.

$1.$ Calculate net income for years $1-5$

$2.$ Calculate free cash flows for years $0-5$

$3.$ If the discount rate is $8\%,$ calculate project's NPV