Problem:
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 $11.90 million. This investment will consist of $2.20 million for land and $9.70 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 $5.13 million, $2.35 million above book value. The farm is expected to produce revenue of $2.09 million each year, and annual cash flow from operations equals $1.99 million. The marginal tax rate is 35 percent, and the appropriate discount rate is 9 percent.
Required:
Question: Calculate the NPV of this investment.
Note: Provide support for your rationale.