Questionarcher daniels midland company is considering

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Question:

Archer Daniels Midland Company is considering buying a fresh farm that it plans to operate for 10 years. The farm can require an initial investment of $11.90 million. This investment can consist of $2.60 million for land and $9.30 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 at a price of $5.04 million, $2.06 million given book value. The farm is expected to produce revenue of $2.09 million each year, and annual cash flow from operations equals $1.97 million. The marginal tax rate is 35 %, and the appropriate discount rate is 10 percent. Evaluate the NPV of this investment.

NPV $

The project should be Accepted or Rejected (circle one)

Reference no: EM13348531

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