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ivanhoe company is considering buying a new farm that it plans to operate for 1 0 years. the farm will require an initial investment of

ivanhoe company is considering buying a new farm that it plans to operate for 10 years. the farm will require an initial investment of 11.85 million. this investment will consist of $2.15 million for land and $9.70 million for trucks and other equipment. the land, all trucks, and all other equipment are expected to be sold at the end of 10 years for a price of $5.25 million, which is $2.00 million above book value. The farm is expected to produce a revenue of $2.10 million each year, and annual cash flow from operations equals $1.90 million. The marginal tax rate is 25 percent, and the appropriate discoint rate is 10 percent. Calculate the NPV of this investment.

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