Suppose a farmer is considering the purchase of a combine for custom work as one way to increase farm income. The initial purchase price $($paid all up$-$front$)$ of the combine is $$525,000$ : $$464,400$ for the basic combine unit, $$41,700$ for the corn head, and $$18,900$ for the soybean head. The combine is expected to last eight years with a salvage value of $$67,837$ after eight years. Based on expected usage of $1,200$ acres of soybeans and $1,200$ acres of corn, total operating costs per acre are $$12\mathrm{.}70$ for soybeans and $$14\mathrm{.}28$ for corn. These costs are expected to increase at the rate of $3\mathrm{.}50\%$ per year.

The farmer thinks he can sign enough contracts to harvest $1,200$ acres each of corn and soybeans. The local custom harvest market pays $$24/$acre for soybeans and $$28/$acre for corn harvest. These custom rates are expected to rise $5\mathrm{.}2\%$ per year.

There are no tax implications to consider here. The farmer has chosen $9\%$ as the discount rate.

Fill in the Table to analyze the Present Value of the Combine Purchase.

$\backslash$table$[[$Year$,\backslash$table$[[$Cash$],[$Income$]],\backslash$table$[[$Cash$],[$Expense$]],\backslash$table$[[$Salvage$],[$Value$]],\backslash$table$[[$Annual Net$],[$Cash Flow$]],\backslash$table$[[$Discount$],[$factor$]],\backslash$table$[[$Present Value of$],[$Annual Net Cash$],[$Flow$]]],[0,0,525000,0,-525000,1,],[1,62400,32376,0,30024,0\mathrm{.}91743,],[2,,,,$D$,,],[3,,,,$E$,$G$25000,],[4,,,,$F$,,],[5,,,,,,],[6,,$B$,,,,],[7,,,,,,],[8,$A$,,$C$,,,],[,,,,,$NPV$,]]$