Computing npv of investment if marginal tax rate is given

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Q1) Archer Daniels Midland Company is considering purchasing new farm which it plans to operate for ten years. Farm will need the initial investment of $12.00 million. This investment will comprise of $2.30 million for land and $9.70 million for trucks and other equipment. Land, all trucks, and all other equipment is expected to be sold at the ending of ten years at the price of $5.21 million, $2.40 million above book value. Farm is expected to make revenue of= $2.08 million each year, and annual cash flow from operations equals $1.98 million. Marginal tax rate is 35%, and suitable discount rate is 9%. Compute the NPV of this investment. Must this project be accepted or rejected?

Reference no: EM1310696

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