DEERE \& COMPANY DEERE \& COMPANY CONSOLIDATED BALANCE SHEETS As of October 30,2022 and October 31, 2021 (In millions of dollars) The notes to consolidated financial statements are an integral part of this statement. 3.ACQUISMONSAND DISPOSTIONS 14. PROPERTY AND DEPRECIATION Acquisitions A summary of property and equipment at October 30, 2022 and October 31, 202 l in millions of dollars follows: BearFlag In August 2022, the company acquired Bear Flag Robotics, Inc. [Bear Flag) to further accelerate Deere's development and delivery of advanced technology. Bear Flag's technology is complementary to other Deere technology efforts and enables autonomous tractor operations. The total cash purchase price before final adjustments, net of cash acquired of $4 million, was $225 million, The asset and liability fair values at the acquistion date in millions of dollars follow: Total property and equipment additions in 2022, 2021, and 2020 were SU197 million, 5897mili on, and $815 million and depreciation was $806 million. $830m ilion, and $800 million, respectively. The identified intangble was related to technology with a sevenyear amortization period. The goodwill will not be deductible for tax purposes: 13. INVENTORIES A majority of inventory owned by Deere \& Company and its US. equipment subsidianies are valued at cost, on the "last-in, first-out" 15. GOODWIL AND OTHERINTANGIBLE ASSETS - NET (LiFO) basis. Remaining inventories are generally valued at the lower of cost, on the "first-in, first-out" IFiFO) basis, or net The changes in amounts of goodwill by operating segments were realizable value. The value of gross inventories on the LIFO basis at October 30,2022 and October 31,2021 represented 57 percent and 54 percent, respectively, of worldwide gross inventories at FIFO value. If all inventories had been valued on a FiFO basis, estimated. inventories by majpr classification at October 30,2022 and October 31. 2021 in millions of dollars would have been as follows. There were no accumulated goodwil impairment losses in the reported periods. The components of other intangible assets are as follows in millions of dollars: In September 2017, the company acquired Blue River Technology's in-process research and development related to machine learning technology to optimize the use of farm inputs. Those research and development activities were completed, and the company started amortizing the acquired technology in 2022. Other intangible assets are stated at cost less accumulated amortization. The amortization of other intangible assets in 2022, 2021 , and 2020 was $145 million, \$116 million, and \$102 million, respectively. The estimated amortization expense for the next five years is as follows in millions of dollars: Part IV: Time Value of Money ( 25 points) Ignore any income tax effects. 1. (25 points) On January 1st,2022, Golden Sailing AG, a manufacturer of custom luxury yachts, started to build a yacht to fulfill a customer order. Golden Sailing plans to finish the yacht at the end of June 2023. Golden Sailing estimates that it will incur monthly production costs of $600,000 in 2022 but expects that inflation will increase monthly production costs to $700,000 in 2023 . Golden Sailing pays its production costs at the end of the month they occur. Starting July 2023 , Golden Sailing will no longer incur production costs for the yacht. Golden Sailing needs to rent additional production space to manufacture the yacht. The rent is $840,000 per year and is paid in advance for the whole year on January 1st of 2022 and 2023 . As such, Golden Sailing capitalizes a prepaid rent asset at the beginning of each year and recognizes the corresponding rent expense at end of each month of the year. Before returning the property to the landlord at the end of December 2023 , Golden Sailing will have to clean up the space. It will hire an external contractor for that. The external contractor is expected to be paid $100,000 at the end of September and December of 2023. According to industry standard, the customer makes a pre-payment of $4,000,000 on January 1st,2022, to get the production started and a final payment when the yacht is finished on June 30,2023. Golden Sailing discounts cash flows at a 18% annual interest rate that compounds monthly. What is the final payment that Golden Sailing has to charge its customer to earn the 18% annual return compounding monthly, i.e., for the project to have NPV =0