United Pigpen is considering a proposal to manufacture high$-$protein hog feed. The project would make use of an existing warehouse which is currently rented out to a neighboring firm. This year$$s rental charge on the warehouse is $$100,000$ and this number is expected to grow at $4\%$ per year. In addition to using the warehouse the proposal envisages an investment in plant and equipment of $$1\mathrm{.}2$ million. Depreciation is $$120,000$ per year. Pigpen expects to terminate the project after eight years and to resell the plant and equipment then $($i$.$e$.,$ in t$=8)$ for $$400,000.$ The project requires an initial $($t$=0)$ investment in working capital of $$350,000.$ Thereafter, working capital is forecasted to be $10\%$ of sales in each of years $1$ through $7.$

This year$$s sales of hog feed are expected to be $$4\mathrm{.}2$ million and thereafter sales are forecasted to grow by $5\%$ per year. Manufacturing costs are expected to be $90\%$ of sales. The corporate tax rate is $35\%$ and the cost of capital is $12\%.$

What is the NPV of Pigpen$$s project?

Hint: Ask yourself if the sale of the plant and equipment in t$=8$ is taxable.