Hades plc produces Demeter plant food. It is a liquid additive, sold in small bottles, which helps house plants grow faster. It is a fairly unique product and there is not much competition for this particular product. It is different from other plant foods.

Demand this year is strong for the product and Hades Demeter factory is operating at its capacity of $4$ million bottles per year. Sales could reach $4\mathrm{.}5$m next year if Hades had the productive capacity. An analysis carried out by the marketing team at the company, has predicted sales figures of $4\mathrm{.}5$m$,5\mathrm{.}1$m and $5\mathrm{.}9$m over the next three years, if Hades spent an extra $325,000$ per annum on advertising in each of these years. It is expected that sales will continue at the rate of $5\mathrm{.}9$m in year four onwards.

To achieve this will need an investment in extra productive capacity. The new equipment would cost $825,000,$ there would be $75,000$ of capitalised installation costs. The equipment would be depreciated straight line to zero over four years. The life of the equipment could be extended to five years if Hades overhauled the equipment at the end of year $4.$ The overhaul would be expected to cost $140,000$ and this cost would be expensed at the time it was carried out. The salvage value of the equipment at the end of five years is expected to be $60,000.$

The wholesale price of the Demeter plant food is $1\mathrm{.}40$ per bottle and there are variable costs of $0\mathrm{.}92$ per bottle.

Extra investment in working capital would be needed at the start of the expansion project. This would amount to $90,000$ and working capital would be maintained at the $90,000$ level through until the end of the project. There are also interest payments of $33,500$ per year through the life of the project and equipment removal costs at the end of the project of $30,000.$

The company had spent $500,000$ on market research to see if the expansion is a viable investment

Assume that the weighted average cost of capital is $14\%$ and the tax rate is $30\%.$

Required

Layout the relevant cash flows for the project and calculate the NPV$.$ What should the company do$?$