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Task1. Briar crest Condiments is the spice-making firm. Recently, it developed a new procedure for producing spices. The procedure needs new machinery that would cost $2,102,895. Have a life of five years, and would produce the cash flows shown below:

Year Cash Flow


i) What is the NPV if the discount rate is 15.29 percent?

Task2. You desire to retire in 22 years. To fund the retirement, you deposit $10,000 into an account now and plan to save an equivalent amount per year. Once you retire, you desire to withdraw $45,000 at the end of each year for 18 years. r=6%. How much do you need to save at the end of each year for the next 22 years?

Task3. Archer Daniels Midland Company is considering purchasing a new farm that it plans to operate for 10 years. The farm will need an initial investment of $12.10 million. This investment will consist of $2.10 million for land and $10.00 million for trucks and other equipment. The land, all trucks, and all other equipment are anticipated to be sold at the end of 10 years at a price of $5.20 million, $2.26 million above book value. The farm is anticipated to produce revenue of $2.02 million each year, and annual cash flow from operations equals $1.84 million. The marginal tax rate is 35 percent, and the proper discount rate is 10 percent. Evaluate the NPV of this investment.

Financial Accounting, Accounting

  • Category:- Financial Accounting
  • Reference No.:- M93406

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