Chapter 6 Problem 4: A farmer is considering a new more highly automated irrigation system and looks at 3 alternatives with the following cash flows. The improved revenues are due to increased crop yields, improved soil quality, reduced water usage and improved crop quality. Assume that these project alternatives are independent. Calculate the NPV of each alternative and select the best project. Parameter Drip Irrigation Sprinkler Irrigation Center Pivot Irrigation Initial investment cost $540,000 $880,000 $1,255,000 Annual maintenance and operational costs $25,000 $20,000 $40,000 Annual revenue $120,000 $140,000 $240,000 Salvage value at end of useful life $44,000 $58,000 $125,500 Market value at end of study period $34,000 $70,000 $130,000 Project life 3 6 12 MARR 11% 11% 11% What is the NPV of Sprinkler Irrigation