Question
Only Fresh Pty Ltd is a grower and wholesaler of fresh fruit. They are contemplating which one of the following alternative fruits to grow and
Only Fresh Pty Ltd is a grower and wholesaler of fresh fruit. They are contemplating which one of the following alternative fruits to grow and add to their product range:
Blueberries | Raspberries | |||
Year 0: Research and feasibility studies | $35,000 | $65,000 | ||
Land preparation and establishment costs until harvest (per hectare) | $91,000 | $128,500 | ||
Expected sales quantities (per hectare, per year) | 9,800 | trays | 8,100 | trays |
Selling price per unit (per tray) | $32 | $36 | ||
Variable costs (per tray) | $24 | $30 | ||
Farm size | 3 | hectares | 3 | hectares |
Years to grow | 4 | years | 2 | years |
Years of harvest | 6 | years | 8 | years |
All produce is sold during the harvest years. Blueberries cannot be harvested until year 4, whereas, Raspberries can be harvested from year 2 onwards.
What would be the difference in profit between the two fruits over the life of the produce? (Ignore the time value of money and any GST implications).
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