Alculate the npv of this investment

Assignment Help Corporate Finance
Reference no: EM13949309

1. Archers Daniels Midland Company is considering buying a new farm that it plans to operate for 10 years. The farm will require an initial investment of $12 million. The investment will consist of $2 million for land and $10 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 at a price of $5 million, $2 million above book value. The farm is expected to produce revenue of $2 million each year, and annual cash flow from operates equals $1.8 million. The marginal tax rate is 35 percent, and the appropriate discount rate is 10 percent. Calculate the NPV of this investment.

Reference no: EM13949309

Questions Cloud

Are the normality and linearity assumptions assumed : How can you tell for each of these? What could be another set of independent variables, if any, that could be added to better predict this relationship?
Examine the relationship between drugs and crime : Examine the relationship between drugs and crime. What methods or steps can we take for prevention
Calculating returns and variability-standard deviations : Use the following returns for X and Y. Returns Year X Y 1 22.4 % 28.2 % 2 – 17.4 – 4.4 3 10.4 30.2 4 20.8 – 15.8 5 5.4 34.2. Calculate the average returns for X and Y. Calculate the standard deviations for X and Y.
Find an example of an actual data warehouse. : The data warehouse example provided should be publically accessible.
Alculate the npv of this investment : The farm is expected to produce revenue of $2 million each year, and annual cash flow from operates equals $1.8 million. The marginal tax rate is 35 percent, and the appropriate discount rate is 10 percent. Calculate the NPV of this investment.
Something in the video that you found interesting : Write a 400 word essay about something in the video that you found interesting. Discuss what was said and why you find it interesting. As part of your essay, you must also include a follow up question about the topic that you would like to have be..
Define the functions of law in society : Define the functions of law in society. Define the role of law in business. Compare and contrast means for resolving domestic and foreign legal disputes
How the groups are numbered in modern periodic table : How the groups are numbered in modern periodic table? How the groups were numbered in periodic table of American system of naming? How the groups were numbered in periodic table of European system of naming? Do the groups from 3-10 have any trivial n..
Bond with a face value : A 15-year bond with a face value of $1,000 currently sells for $850. Which of the following statements is CORRECT?

Reviews

Write a Review

Corporate Finance Questions & Answers

  Impact of the global economic crisis on business environment

This paper reviews the article of ‘the impact of the global economic crisis on the business environment' that is written by Roman & Sargu (2011).

  Explain the short and the long-run effects on real output

Explain the short and the long-run effects on real output, price, and unemployment

  Examine the requirements for measuring assets

Examine the needs for measuring assets at fair value in accounting standards

  Financial analysis report driven by rigorous ratio analysis

Financial analysis report driven by rigorous ratio analysis

  Calculate the value of the merged company

Calculate the value of the merged company, the gains (losses) to each group of shareholders, NPV of the deal under different payment methods. Synergy remains the same regardless of payment method.

  Stock market project

Select five companies for the purpose of tracking the stock market, preparing research on the companies, and preparing company reports.

  Write paper on financial analysis and business analysis

Write paper on financial analysis and business analysis

  Intermediate finance

Presence of the taxes increase or decrease the value of the firm

  Average price-earnings ratio

What is the value per share of the company's stock

  Determine the financial consequences

Show by calculation the net present value for the three alternatives (no education, network design certification, mba). Also, according to NPV suggest which alternative you advise your friend to choose

  Prepare a spread sheet model

Prepare a spread sheet model for the client that determines NPV/IRR with and without tax.

  Principles and tools for financial decision-making

Principles and tools for financial decision-making. Analyse the concept of corporate capital structure and compute cost of capital.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd