A farmer is considering investing in the purchase of a combine to replace custom hiring of 583 hectares of wheat at $84 per hectare. The purchasing cost of the combine is $324,000. The combine has a useful life of 17 years and a salvage value of $35,000. The opportunity cost of capital is assumed to be 8.7%. Annual taxes are estimated to be $175 and insurance costs $275. Yearly variable costs are estimated at $2,458 for repairs, $2,890 for fuel and lubricants and $750 for labour.

(a) Would the investment in the combine be profitable? What is the net change in profit? Show your calculations.

(b) What is the break-even custom charge and land size respectively? Explain briefly what this means.