Question: Create a new workbook in Excel. Please include an input area and an answer area for each problem. You will have an answer for each

Create a new workbook in Excel. Please include an input area and an answer area for each problem. You will have an answer for each bullet point. Formatting is up to you. Just make sure it is easy to tell where your answers are, and what equation you used in excel to get the answer.

  1. Assume a farmer has a choice of purchasing either a subsurface drip irrigation (SDI) system or a low energy precision application (LEPA) center pivot. The SDI system would cost $1200 per acre to install versus $556 per acre for the LEPA system. The estimated life for each system is 20 years. The salvage value at the end of the useful life is 20% of the initial investment. Assume that the discount rate of money is 2.25%.
  • Calculate the present value of the salvage value for SDI per acre.
  • Sum the system investment with the present value of the salvage to get the total net investment for SDI per acre.
  • Calculate the present value of the salvage value for LEPA per acre.
  • Sum the system investment with the present value of the salvage to get the total net investment for LEPA per acre.
  • Conclude which system would have a higher net investment.
  • What are some other things to consider for the investment?

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