A farmer wants to establish a vineyard and the grape vines and trellising cost $425,000 to establish and construct. The farmer already owns the land. In years 1, 2, 3, and 4 the vineyard has maintenance and production costs of $30,000 annually in order to care for the vines.

Starting in year 5 the vineyard should earn an after-tax net income of $15,000 and in year 6, $30,000. From that point on it is expected to earn $90,000 annually for its expected life of 30 additional years when it will have no salvage value. The farmer's cost of capital is 8 percent.

Calculate the net present value.

Then calculate the Internal Rate of Return.

(5 points for each)

Please answer correctly with steps shown. I will rate. The solution is graded immediately.