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 The next year's rental charge on the warehouse is $100,000, and thereafter the rent is expected to grow in line with inflation at 4 percent a year In addi tion to using the warehouse, the proposal envisages an investment in plant and equip ment of si 2 million. This could be depreciated for tax purposes straight-line over 10 years. However, Pigpen expects to terminate the project at the end of eight years and to resell the plant and equipment in year 8 for S400,000 Finally, the project requires an ini- tial investment in working capital of $350,000. Thereafter. working capital is forecasted to be 10 percent of sales in each of years 1 through 7 Year i sales of hog feed are expected to be $4.2 million. and thereafter sales are fore cast to grow by 5 percent a year, slightly faster than the inflation rate, Manufacturing costs are expected to be go percent of sales, and profits are subject to tax at 35 percent The cost of capital is 12 percent What is the NPV of Pigpen's project?