Neco Model Questions Vol1 2022 Agricultural Science Question 40
Practice objective / multiple choice question 40 from the 2022 Neco Model Questions Vol1 Agricultural Science examination.
A farmer is evaluating the purchase of a new tractor costing ₦2 500 000. The tractor has a useful life of 5 years and a salvage value of ₦500 000. Expected net operating cash inflows (before tax) are: Year 1 ₦800 000, Year 2 ₦850 000, Year 3 ₦900 000, Year 4 ₦950 000, Year 5 ₦1 000 000. The corporate tax rate is 30 % and the tractor will be depreciated on a straight‑line basis. The discount rate is 12 % per annum. Calculate the net present value (NPV) of the investment, including the tax shield from depreciation and the salvage value at the end of year 5. State whether the investment is financially viable (NPV > 0). Give the NPV in ₦ to the nearest thousand.
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About This Question
This is Neco Model Questions Vol1 2022 Agricultural Science Question 40. It is one of the objective questions from the 2022 Neco Model Questions Vol1 Agricultural Science examination.
Difficulty level: Hard .
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