Chteau Beaune is a family-owned winery located in the Burgundy region of France, headed by Gerard Despinoy. The harvesting season in early fall is the busiest time of the year for the winery, and many part-time workers are hired to help pick and process grapes. Despinoy is investigating the purchase of a harvesting machine that would significantly reduce the amount of labour required in the picking process. The harvesting machine is built to straddle grapevines, which are laid out in low-lying rows. Two workers are carried on the machine just above ground level, one on each side of the vine. As the machine slowly crawls through the vineyard, the workers cut bunches of grapes from the vines, and the grapes fall into a hopper. The machine separates the grapes from the stems and other woody debris. The debris is then pulverized and spread behind the machine as a rich ground mulch. Despinoy has gathered the following information relating to the decision of whether to purchase the machine (the French currency is the euro, denoted by C): a. The winery would save 285,000 per year in labour costs with the new harvesting machine. In addition, the company would no longer have to purchase and spread ground mulch-at an annual savings of 15,100, b. The harvesting machine would cost 1017,600. It would have an estimated 12-year useful life and zero salvage value. The winery uses straight-line depreciation. c Annual out-of-pocket costs associated with the harvesting machine would be insurance, 6,200; fuel. 614,100; and a maintenance contract, 20,400 In addition, two operators would be hired and trained for the machine, and they would be paid a total of 95,000 per year, including all benefits. d. Despinoy feels that the investment in the harvesting machine should eam at least a 9.0% rate of return. Click here to view Exhibit 10-1 and Exhibit 10-2. to determine the appropriate discount factor(s) using tables Required: Ognore income taxes) 1. Determine the annual net savings in cash operating costs that would be realized if the harvesting machine were purchased, Annual savings in cash operating costs 2. Compute the SRR expected from the harvesting machine. (Hint This is a cost reduction project) (Round your answer to 1 decimal place (i... 0,123 should be considered as 12.3%).) Simple rate of return 3-a. Compute the payback period on the harvesting machine. (Round your answer to 1 decimal place.) Payback period years 3-b. Despinoy will not purchase equipment unless it has a payback period of seven years or less. Under this criterion, should the harvesting machine be purchased? Yes NO 4-a. Compute the IRR promised by the harvesting machine. (Round discount factor(s) to 3 decimal place and final answer to the nearest whole number e., 0.123 should be considered as 12).) Internal rate of return % 4-6. On the basis of this computation does it appear that the SRR is an accurate guide in investment decisions? O Yes O No EXHIBIT 10-1 Present Value of $1 F. P= 30% 40% 20% 16% 225 24% 125 185 26% 145 10 45 8% Period 5% 1 2 3 + 5 6 7 8 o 0.962 0.952 0943 0 926 0909 08930877 0562 O $47 0.833 0.820 0.506 0.794 0.781 0769 0714 0.925 0.907 0.890 0.857 0.826 0.797 0.7690743 0.7180.694 0.672 0 650 0610 0610 0 5920510 0.859 0564 0.840 0.794 07510712 0675 0641 06090.579 0.551 0.524 0.500 0.477 0455 0,364 0.855 0.823 0.792 0.735 0683 0.636 0.592 0.552 0516 0.482 0451 0.423 0.397 0.3730350 0260 0822 0.784 0.747 0681 0.621 0.567 0.519 0.476 0.437 0.402 0.370 0.341 0.315 0.291 0 269 0.186 0.790 0.746 0.705 0630 0.5610 507 0456 0410 0370 0335 0.303 0.275 0.250 0.227 0.207 0133 0.760 0.711 0.665 0.583 0.513 0.452 0.400 0.354 0314 0279 0.249 0222 0.19 0.17 0.159 0095 0.731 0.677 0.627 0 540 0.467 0.404 0351 0305 0.266 0233 0.204 0.179 0.157 0.139 0123 0068 0703 0.645 0.592 0.500 0.424 0.361 03080263 02250194 0.167 0.144 0.125 0.105 0.094 0045 0676 0614 0.558 0463 0386 0.322 0.270 0.227 0.191 0.162 0.137 0.116 0099 0.035 0073 0.035 0.650 0 585 0.527 0.429 0.350 0.287 0237 0 195 0.162 0.135 0.1120094 0.079 0.0660056 0.025 0.625 0.557 0.497 0.397 0.319 0.257 0.205 0 168 0.137 0.112 0092 0076 0062 0,052 00430018 0.601 0530 0.469 0.368 0.290 0.229 0.182 0.145 0.116 0.093 0075 0.061 00500040 0 033 0013 0.577 0505 0.442 0.340 0.263 0.205 0.160 0125 0.099 0.078 0062 0049 0039 0032 0.025 0.009 0.555 0.481 0417 0315 0239 0.1830 140 0.1080054 0.065 0051 0.04000310025 0.020 0006 0.534 0.453 0.394 0.292 0218 0.163 0.123 0.093 0.071 0.054 0.042 0032 0.025 0019 0.015 0.005 0.513 0.436 0371 0.270 0.1960.146 0.105 0.030 0.060 0045 0.034 0026 0020 0015 0012 0.003 10 11 12 13 14 15 16 17 18 19 20 21 24 0.494 0.416 0.350 0.250 0.150 0.1300095 0.069 0.051 0038 0.025 0.021 0.0160012 0.0090002 0.475 0.396 0.331 0232 0.164 0.1160083 0.060 0.043 0031 0023 0.017 0,012 0009 0.007 0.002 0456 0.377 0312 02150 149 0.104 0.073 0.051 0.037 0.026 0019 0.014 0.010 0.007 0.005 0.001 0.4390350 0.294 0.1990 135 0.093 0064 0.044 0031 0022 0.015 0011 0005 0.006 0.001 0.001 0.422 0.342 0.278 0.154 0.123 0.083 0056 0.035 0.026 0018 00130.0090.006 0.004 0.000 0001 0406 0.326 0.262 0.170 0112 0074 0.019 0.033 0022 001S0010 0.007 0.003 0.003 0.002 0.390 0310 0247 0.158 0.1020066004300280019 00130 008 0006 0.0040003 0.002 0.375 0295 0.233 0.146 0 092 0059 0.035 0.024 0.016 0010 0.007 0.005 0.003 0.002 0001 0.361 0.281 0220 0.135 0.084 0033 0033 0.021 0014 0.009 0006 0.001 0.002 0.0020001 0347 0268 0207 0.125 0.076 0047 0.029 0.013 0011 0007 0.005 0.003 0.002 0.001 0001 0.33 0.25% 0.19 0.116 0.069 0012 0.026 0,016 0010 0000 0004 0002 0.002 0.001 0001 0.321 0243 0.18 0.107 0063 0037 002 0014 0.00 0.00 0.00 0.002 0.001 0.001 0.00 0.231 0.1740099 0.057 0033 0000 0012 0.007 0.00+ 0.003 0.002 0001 0.001 0:208 0.142 0097 00:16 0.022 0011 0005 0.001 0.001 0.001 25 26 27 25 10 10 M Question 4 - EXHIBIT 10-2 Present Value of an Annuity of $1 P 4 Period 65 5 0926 0.943 0962 1 2 0.952 1359 1556 13 2.775 2673 1783 2.577 3.312 + 3.546 3465 3610 4452 5 4330 4212 3 993 5.242 5.076 4917 2 6002 5.756 5.582 5.206 5.747 6.733 6.463 6210 9 7435 7105 6 802 6247 6710 10 8.111 7.722 7360 5.650 IT 8760 8.306 7587 7139 12 2355 S863 8.354 7536 13 9.986 9394 $853 7.904 14 10363 9.599 9.295 8.244 15 10380 9,712 8.559 40 135 205 26 30 245 145 125 105 0909 0.593 087705620.547 033 0320 0.06 0.794 075 0.769 0714 1.736 1 690 1 647 160515661528119214571.424 392 361 1224 2.487 2402 2.322 2246 2174 2106 2012 1951 1923 1565 1816 1599 2.166 1.579 31703037 291427952690 2599 2004 2005 2330 2.241 2015 3.7913605 3.433 3274 3.127 2.991 2.564 2755 265 25122436 4355 3.589 36353198 3.326 3.167 3.000 2885 2759 2643 2.168 4865 4564 42554039 35123608 3416 32423.0032.937 2803 2.263 5.335 46394344 40753337 3619 3.4013241 3076 2925 2331 5.759 5328 4.916 1607 43034031 3.756 3.566 3366 3.134 3019 2379 6.145 5 216 4833 4491 492302336623.465 3.269 3.092 2414 6 495 5.938 5 453 5029 4656 43274035 3.776 3544 3.335 3.147 2.438 6 814 6.194 5660 5 1974793 43394127_33513606 3.387 3.190 2456 71036424 5 542 5.342 4910453342033912 36563.427 32232465 7.367 6628 6 002 5463500S 4611 4265 3962 3695 3.459 3219 2477 7.606 681 6.142 5.575 309246754315 4001 3726 3483 3265 2454 7.624 6974 62655669 5.162 47304357 4033 3.751 3 503 3.283 2489 8.022 7.120 6373 5.7493.222 4775 391 4059 3.771 3.518 J295 2.092 8.201 7250 6.467 5.615 5.2734512 2050 3.756 3.529 3304 2494 8.365 7366 6550 5.877 5316 454 442097 3.799 3.5993311 2496 8514 7460 6 623 5929 5.353487044604110 39053346 3316 2497 8.6497562 668739735344391 4.676 4120 3516 3551 33202.495 8.7227645 6.7436011 5410 4.909 #103.522 3556 3323 2.498 S8837.713 6.792 67926044 54324925 44994137 3827 1135 2199 3955 7.754 6.535 65356073 5 431 497 4902 4.143 3331 3.327 2.499 907778436373 6.7) 6097 5467 49 514 4147 3.834 3.329 2.490 7,890 6900 6.906 6113 150 956 4520 4151 3.837 30 2.500 9237 7943 6935 6935 136 5424955 1535 150 3.339 3331 2.500 9.3077954 6961 69616152358049705254157 3.840 3331 2.500 93705026963 693 0166 $510 4975 4531 159 3.341 212 2500 9.427 0557003 7003 6.177 5511 490 45344160334 33322.500 9.7793244 7105 6234 35 199 454 4106356 333 2.500 To 11.652 10835 10.106 10477 9.122 12 18 12.100 12.659 11274 11.690 10.823 9372 9-604 19 13.131 12.085 11.158 11 470 20 9818 13.500 14029 21 12.321 11.761 10017 12012 22 23 13:163 13499 10 201 10.371 14557 15 247 15.622 12.303 12550 12.783 10.529 25 14.09 10675 10.510 26 15.90 14375 9161 27 16 330 146-13 13211 13406 10913 11 OS 28 16 663 14390 15.141 16954 11.15 19.591 13.763 30 17.292 15373 19.7917159 10 55016 11.923 7.105