A farmer has the opportunity to purchase an advanced guidance system for precision farming.This is the advertisement:

New Outback MAX Guidance System

Outback MAX with OutbackConnX introducing the next generation Outback Guidance system that redefines simplicity in precision farming.

The farmer believes that the guidance system that can be purchased for $5,000 will improve corn production by 200 bushels per year.He plans to keep the Guidance system for 10 years.At the end of 10 years he believes he can sell it for $500.The farm's accountant has done some preliminary work.The marginal tax rate is 30%, thepre-tax risk adjusted discount rate is 12% and inflation is assumed to be zero.The account calculates the present value of the tax savings from depreciation to be $1,100.55, and the present value of the after-tax terminal value to be $156.23.The price of corn is expected to be $4.30/bushel over the 10 years.

(i)Calculate the additional after-tax net returns from corn production if the farmer purchases the guidance system.

A.$900

B.$630

C.$270

D.$750

E.None of these answers

Enter Response Here:

(ii)Calculate the after-tax risk adjusted discount rate.

A.6.0%

B.12%

C.3.6%

D.1.25%

E.None of these answers

Enter Response Here:

(iii)Calculate the present value of the additional after-tax net returns from corn production if the farmer purchases the guidance system.

A.$5,932

B.$1,779

C.$4,152

D.$2,963

E.None of these answers

Enter Response Here:

(iv)Calculate the NPV of the guidance system.

A.$156

B.$1100

C.$445

D.$409

E.None of these answers

Enter Response Here:

(v)Calculate the break-even improvement in corn production (yield) if the farmer purchases the guidance system.

A.$150

B.$180

C.$140

D.$170