What is the annual cash flow from operations


Archer Daniels Midland Company is considering buying a new farm that it plans to operate for 10 years. The farm will require an initial investment of $12.10 million. This investment will consist of $2.30 million for land and $9.80 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 $5.15 million, $2.26 million above book value. The farm is expected to produce revenue of $2.07 million each year, and annual cash flow from operations equals $1.91 million. The marginal tax rate is 35 percent, and the appropriate discount rate is 9 percent. Calculate the NPV of this investment.

Request for Solution File

Ask an Expert for Answer!!
Finance Basics: What is the annual cash flow from operations
Reference No:- TGS0517018

Expected delivery within 24 Hours