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 $12.10 million. This investment will consist of $2.90 million for land and $9.20 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 $5.11 million, $2.11 million above book value. The farm is expected to produce revenue of $2.00 million each year, and annual cash flow from operations equals $1.87 million. The marginal tax rate is 35 percent, and the appropriate discount rate is 9 percent. Calculate the NPV of this investment. (Round intermediate calculations and final answer to 2 decimal places, e.g. 15.25.)© BrainMass Inc. brainmass.com September 21, 2018, 11:41 pm ad1c9bdddf - https://brainmass.com/business/the-time-value-of-money/archer-daniels-midland-company-purchase-563292
Solution evaluates the project of Archer Daniels Midland Company is considering buying a new farm, presenting in excel format with all calculations shown step by step.