An olive farmer decides to add a new crop to its farm as reports are suggesting...

 

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An olive farmer decides to add a new crop to its farm as reports are suggesting that lemon myrtle is increasingly demanded by food manufacturers and restaurants due to the growing demand from millennials and Gen Z consumers for native bush foods. The olive farmer decides to invest $125 000 now to buy the lemon myrtle seeds. In one year's time, it will cost $55 000 to harvest the crop, and the harvested crop will be worth $265 000 at that time. Assuming the interest rate is 5.5%, what is the net present value (NPV) of this investment? An olive farmer decides to add a new crop to its farm as reports are suggesting that lemon myrtle is increasingly demanded by food manufacturers and restaurants due to the growing demand from millennials and Gen Z consumers for native bush foods. The olive farmer decides to invest $125 000 now to buy the lemon myrtle seeds. In one year's time, it will cost $55 000 to harvest the crop, and the harvested crop will be worth $265 000 at that time. Assuming the interest rate is 5.5%, what is the net present value (NPV) of this investment?

Answer rating: 100% (QA)

To calculate the Net Present Value NPV of this investment we need to discount the future cash flows ... View the full answer