Calculate the NPV of this investment

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Problem - FCF and NPV for a project - Highland Ltd is considering buying a new farm that it plans to operate for 10 years. The farm will require an initial investment of $12 million. This investment will consist of $2 million for land and $10 million for trucks and other equipment. The land, all trucks and all other equipment is expected to be sold at the end of 10 years for 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 operations equals $1.8 million. The tax rate is 30 per cent and the appropriate discount rate is 10 per cent. Calculate the NPV of this investment.

Reference no: EM133001579

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