Mr. Jones of Montana Farms is thinking about investing in a new J-Wing four-row Beet harvester. He is currently operating two two-row harvesters and the new harvester would replace both of the current potato harvesters. Mr. Jones expects that he will save $29,000 a year by eliminating one tractor and one operator. He also expects the new harvester to not bruise the beets as much as the old harvesters. The beet processor has agreed to pay a $0.11/sack premium for the reduction in bruising. Mr. Jones operates 1,500 acres of Beets and averages 350 sacks to the acre. Mr. Jones contracts all of his acreage with the processor (so calculate the revenue from the premium on the total acreage). The cost of the new Beet harvester is $165,000. Mr. Jones plans on keeping the harvester for 3 years and he thinks he can sell it for $65,000 at the end of 3 years. To maintain the efficiency of the harvester, J-Wing has offered to replace all bearings and chains on the harvester for $22,000 a year starting in year two. Mr. Jones requires at least a 14% return on capital. IRS will allow to depreciate over 7 years and assume that the salvage is 0. The marginal Tax rate is 25%.

A. Show the cash flows for Mr. Jones Investment

B. Calculate the net present value.

C. Is the new beet harvester a profitable investment?