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answer asap ABC Fish Farm, a local fish farm, is considering purchasing a new plot of land for their business for $600,000. The land would
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ABC Fish Farm, a local fish farm, is considering purchasing a new plot of land for their business for $600,000. The land would allow ABC to increase their pre-tax operating income (and cash flow) by $200,000 each year. The company would plan to keep the land for 25 years before selling it for $900,000. Because the land is real property, the company would not take any related depreciation. Alternatively, ABC could purchase a new hatchery facility for $500,000. The hatchery would return $130,000 each year for 25 years, and would be fully depreciated over its 25-year useful life, at which point it would be sold for $300,000. ABC's tax rate is 30%, and the required rate of return is 8%. ABC uses straight-line depreciation method. Required: Based on Net Present Value (NPV), which project is more attractive? Please show your calculations. [Do not round intermediate calculations. Only round final answers (i.e., final NPVS) to the nearest whole number.]Step by Step Solution
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