Question
CF and NPV for a project: Midland Ltd is considering buying a new farm that it plans to operate for 10 years. The farm will
CF and NPV for a project: Midland Ltd is considering buying a new farm that it plans to operate for 10 years. The farm will require an initial investment of $12,000,000. The investment will consist of $2,000,000 for land and $10,000,000 for trucks and other equipment. The land, all trucks, and all other equipment are expected to be sold at the end of 10 years at a price of $5 million, $2 million above book value. The farm is expected to produce revenue of $1,800,000 each year, and an after tax annual cash flow from operations of $1,551,600. The tax rate is 35 percent, and the appropriate discount rate is 13.80 percent. NPV = $________
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