A farmer is considering investing in a drone system to monitor her 2500-acre crop during the season.

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Question:

A farmer is considering investing in a drone system to monitor her 2500-acre crop during the season. She estimates that the drones will help her improve her per-acre operating receipts by $13 while costing her $1.70 per acre. The marginal tax rate is 22% and inflation is .5%. The farmer requires a 16% return on her investment and the risk premium is 2%. If the life of the investment is 6 years, what is the present value of the after-tax net return on the investment?

A. $88,318

B. $88,813

C. $86,739

D. $85,593