A soybean farmer in the Delta is considering investing in drones to better monitor her crops on her 300-acre operation. Drone deployment will help the farmer spot disease or pests infecting her rice. The estimated increased yield/acre from the drones is 25 bu/acre. The price per bushel is $8.97. The initial purchase of each drone is $1,500 and it will require 3 drones. Additional batteries cost $150 each, so she will get an extra battery for each drone. Also, in order to properly operate the drones, she will take a training course, which costs $300. She will finance the purchase for 12 months with 3% interest. These drones should be operational for 3 years, but will not hold a terminal value. The farmer anticipates the marginal tax rate to be 30% over the lifespan of the equipment. The farmer requires a 14% return to capital rate (pre-tax) and the investment will depreciate using straight line over 5 years.

(i) Calculate the after-tax net returns

a.$97,685b.$46,876

c.$47,092d.$54,102

(ii) Calculate the after-tax terminal value

a.$563b.$400c.$420d.*$630

(iii) Calculate the discount rate for calculating the NPV

a.14%b.9.8%c.11%d.12.5%

(iv) Calculate the NPV of the investment

a.$113,538b.$245,763

c.$103,785d.$229,642

(v) Calculate the break-even improvement in production(yield/acre) from the drones?