Daniels agricultural products is considering buying new

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Daniels Agricultural Products is considering buying a new farm that it plans to operate for ten years. The farm will require an initial investment of 12 million dollars. The investment will consist of 2 million dollars for land and 10 million dollars for trucks and other equipment. The land, all trucks and all other equipment is expected to be sold at the end of ten years for a price of five million dollars, which is two million dollars above book value. The farm is expected to produce revenue of 2 million dollars each year and annual cash flow from operations is projected to be 1.8 million dollars. The marginal tax rate is 35 percent and the company's required return or discount rate is 10 percent. Calculate the NPV of this investment.

Reference no: EM13388968

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