A farmer sows a certain crop. It costs $240,000 to buy the seed, prepare the ground,...
A farmer sows a certain crop. It costs $240,000 to buy the seed, prepare the ground, and sow the crop. In one year's time it will cost $93,200 to harvest the crop. If the crop will be worth $350,000, and the interest rate is 7%, what is the net present value (nPV) of this investment?
Homework Answers
Ans NPV = $ 0
| Year | Project Cash Flows (i) | DF@ 7% | DF@ 7% (ii) | PV of Project ( (i) * (ii) ) |
| 0 | -240000 | 1 | 1 | (2,40,000.00) |
| 1 | -93200 | 1/((1+7%)^1) | 0.935 | (87,102.80) |
| 1 | 350000 | 1/((1+7%)^2) | 0.935 | 3,27,102.80 |
| NPV | 0.00 | |||
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A farmer sows a certain crop. It costs $240,000 to buy the seed,
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A farmer sows a certain crop. It costs $250,000 to buy the seed, prepare the ground, and sow the crop. In one year's time it will cost $95,000 to harvest the crop. If the crop will be worth $350,000, and the interest rate is 10%, what is the net present value (NPV) of this investment? Select one: A. $240,000 B. $567,103 C. $18,181 D. $87,103
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