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Smith family 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.
Smith family 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. The investment will consist of $2 million for land an $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 expration equals $1.8 million. The company tax rate is 30 percent, and the appropriate discount rate is 10 percent. Calculate the NPV of this investment.
