Two different alternatives are presented to run a harvesting redevelopment at a wheat field. Using the information provided, please determine the best plan through comparing the NPVs. Assume an interest rate of 10%.
Plan A
Plan B
The land price
$20,000,000
$12,000,000
Harvester turbines
$60,000,000
$80,000,000
Operation and maintenance cost per year
Estimated
Estimated
Total production per year
60,000,000 kg
100,000,000 kg
Fixed price of the product
$0.2 per kg
$0.25 per kg
Service life
30 years
20 years
End of life value of land
$15,000,000
$10,000,000
Resale value of turbines
$25,000,000
$30,000,000
Part A
Please calculate present worth factor (PVF) which will be used in the calculation of NPV for each plan in this comparison