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please help D Question 30 Continue with the information about Fred and Freida's proposed pecan business that is given above. Now calculate the NPV of
please help
D Question 30 Continue with the information about Fred and Freida's proposed pecan business that is given above. Now calculate the NPV of this project opportunity. Please provide your answer to the nearest dollar. For example, if your answer is $185,978.63 then please input 185,979 or 185979 as your answer. The problem information is repeated below for your convenience: Fred and Freida have always wanted to enter the pecan business. They locate a 150-acre pecan orchard in Lee County, Georgia. They figure that the annual yield from the trees will be 2,200 pounds per acre. Each pound is estimated to sell for $2.25. 5 pts In order to get started, Fred and Freida must pay $2,450,000 for the land plus $120,000 for equipment. The equipment will be depreciated on a straight-line basis to a zero estimated salvage value at the end of 20 years. Fred and Frieda believe that at the end of 20 years, they will want to sell their land and retire to St. Simon's Island (assume the equipment has no salvage/market value at the end of 20 years). Annual operating expenses, exclusive of depreciation, are estimated to be $250,000. The land is expected to appreciate in value at a rate of 1.00 percent per year. Assume that the couple's marginal tax rate is 28 percent for both ordinary income and capital gains and losses. The project will be funded with 40% debt and 60% equity. The asset beta for this project is 1.25. The risk-free rate of interest is 4.5% annually, and the market risk premium is 7.8% annually. Assume that Fred and Freida can borrow at an interest rate of 8:0% annuallyStep by Step Solution
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