United Pigpen is considering a proposal to manufacture a high protein hog feed. The project would make use of an existing warehouse, which is currently rented out to a neighboring firm. The neot year's rental charge on the warehouse is $100,000, and thereafler the rent is expected to grow in line with inflation at 4% a year. In addition to using the warehouse, the proposal requires an investment in plant and equipment. of 5960,000 . This could be depreciated for tax purposes over 8 years. Finally. the project requires an initial investment in working capilal $350.000 in year 0 . Thereatter, from yeac f to 7 project expects accounts receivables 10% of the sales, inventory 5% of the sales and accounts payables 5% of the sales. Year 1 sales of the Hog feed are expected to be $4.2 milion, and thereahter sales are forecasted to grow by 5% a year, stightly faster than the inflation rate. Manulacturing costs are expected to be 90% of the sales, and the profits are subject to tax at 25%. The cost of capital is 12%. Note: most marks will be awarded for workings, so show your workings clearly, you may show the figures in $000 for simplicity. a) Calculate annual net working capital requirements for United Pigpen and calculate the annual change in net working capisal requirements. [06 points] b) Calculate free cash flows while showing calculations of the following heads: Sales, manufacturing cost, Gross profit, opportunity cost (ff any). depreciation, EBIT, taxes, net income, capiali expenditure, and net working capital. [18 points] c) Calculate NPV of the project [O4 points] d) Decision: Should we invest in the project? [02 points]