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Recall from Module 8 the Net Present Value example from the Module 8, Part II lecture about the combine, for which the following details were
Recall from Module 8 the Net Present Value example from the Module 8, Part II lecture about the combine, for which the following details were provided: Used Combine $76,420 Harvest 900 acres/year @ $25/acre 8 year life and after tax salvage value of $19,586 Cash operating costs of $9.03/acre Cash and revenue projected to increase 5%/year Operator in 28% tax bracket Finance the purchase with 30% debt and 70% equity Cost of equity = 13.5% Cost of debt = 12% Construct the Net Present Value of buying the combine, employing it for custom harvest, and selling it at the end of year 8. Match answers from within your Net Present Value analysis as follows
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