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A company is considering buying a new farm that it plans to operate for 10...

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Finance

A company is considering buying a new farm that it plans to operate for 10 years. The farm will require initial investment of $11.80 million. This investment will consist of $2.00 million for land and $9.80million for trucks and other equipment. The land, all trucks, and all other equipment are expected to be sold at the end of 10 years for a price of $5.00 million, which is $2.00 million above book value. The farm is expected to produce revenue of $2.00 million each year, and annual cash flow from operations equals $1.90 million. The marginal tax rate is 25 percent, and the appropriate discount rate is 9 percent. Calculate the NPV of this investment. Round final answer to two decimals.

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