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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

$543,963
299,171
798,022
667,016
669,670

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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