Calculate the npv of this investment

Assignment Help Financial Management
Reference no: EM13726571

Archer Daniels Midland Company is considering buying a new farm that it plans to operate for 10 years. The farm will require an initial investment of $12.00 million. This investment will consist of $2.00 million for land and $10.00 million for trucks and other equipment. The land, all trucks, and all other equipment is expected to be sold at the end of 10 years at a price of $5.00 million, $2.00 million above book value. The farm is expected to produce revenue of $2.00 million each year, and annual cash flow from operations equals $1.80 million. The marginal tax rate is 35 percent, and the appropriate discount rate is 10 percent. Calculate the NPV of this investment

Reference no: EM13726571

Questions Cloud

How much will you pay for the companys stock today : Nofal Corporation will pay a $3.65 per share dividend next year. The company pledges to increase its dividend by 5.1 percent per year, indefinitely. If you require a return of 12 percent on your investment, how much will you pay for the company’s sto..
What is the bonds ytm and bonds ytc : Mr. Greg is considering another bond, Bond D. It has an 8% semi-annual coupon and a $1,000 face value. Bond D is scheduled to mature in 9 years and has a price of $1,150. It is also callable in 5 years at a call price of $1,040. What is the bond’s YT..
Define long-term commitment to employees : The process by which organizations move from their present state to some desired future state is called
What is the relationship between religion and philosophy : What can we say about the relationship between religion and philosophy in Islamic circles? In Christian Renaissance circles? What does this tell us about the origins of the Renaissance?
Calculate the npv of this investment : Archer Daniels Midland Company is considering buying a new farm that it plans to operate for 10 years. The farm will require an initial investment of $12.00 million. This investment will consist of $2.00 million for land and $10.00 million for trucks..
What is the projected NPV using a discount rate : Big steve's makers of swizzle tickets is considering the purchase of a new plastic stamping machine. This investment requires an initial outlay of $110,000 nd will generate net cash inflows of $16,000 per year for 8 years. What is the projected NPV u..
Determine the magnitude of year 0 investment : Reclamation costs on a project are expected to be incurred over a 30 year period from 27 to 56 years in the future from now. Reclamation costs are estimated to escalate 5.0% per year in the future
Dividend provided an investor with a return : A stock that went from $43 per share at the beginning of the year to $47 at the end of the year and paid a $3 dividend provided an investor with a return of ____%: (Keep two decimals)
What is the promise of benefit offered by the ads headline : Would this ad be offensive or demeaning? If yes, why and to whom, What is the promise of benefit offered by the ads headline

Reviews

Write a Review

 

Financial Management Questions & Answers

  Garnett jackson the founder and ceo of tech tune-ups stared

garnett jackson the founder and ceo of tech tune-ups stared out the window as he finished his customary peanut butter

  Find internal rate of return

Find Internal Rate of Return. Initial outlay is $469,000. The project will produce the following after tax cash inflow

  Justify and criticize the usual assumption made in

justify and criticize the usual assumption made in financial management literature that the objective of a company is

  Calculate the finance charge and monthly payment

Zachary Porter of Highland Heights, Kentucky, is contemplating borrowing $10,000 from his bank. The bank could use add-on rates of 6.5 percent for 3 years, 7 percent for 4 years, and 8 percent for 5 years. Use Equation 7.1 to calculate the finance ch..

  Write a 750- to 1050-word paper in which you describe a

write a 750- to 1050-word paper in which you describe a project you have managed personally or professionally. examples

  Compute the payoff schedule for the call option

Compute the payoff schedule for the call option using the following stock prices, S, and draw a graph of the payoff schedule and Compute the payoff schedule for the call option using the following stock prices, S, and draw a graph of the payoff sched..

  Moving average forecasting models are powerful tools that

moving average forecasting models are powerful tools that help managers in making educated forecasting decisions. a

  What is the economic ordering quantityhow many orders will

a what is the economic ordering quantity?b how many orders will be placed during the year?c what will the average

  Show the preset value of the present collection experience

Using NPV calculation, show the preset value of the present collection experience and calculate the NPV of the proposed 2/10, net-30 terms.

  Different implications of running a country that is within

different implications of running a country that is within or outside of the european union. if you were the head of a

  Weighted average cost of capital evaluate 2012 financial

weighted average cost of capital evaluate 2012 financial statements and other financial data example beta for

  With the increasing use of digital payments and the

with the increasing use of digital payments and the decreasing use of cash payments enhanced digital security and

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd