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Please correct red and complete The Elberta Fruit Farm of Ontario has always hired transient workers to pick its annual cherry crop. Francie Wright, the

Please correct red and complete

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The Elberta Fruit Farm of Ontario has always hired transient workers to pick its annual cherry crop. Francie Wright, the farm manager, has just received information on a cherry picking machine that is being purchased by many fruit farms. The machine is a motorized device that shakes the cherry tree, causing the cherries to fall onto plastic tarps that funnel the cherries into bins. Ms. Wright has gathered the following information to decide whether a cherry picker would be a profitable investment for the Elberta Fruit Farm a. Currently, the farm is paying an average of $220,000 per year to transient workers to pick the cherries b. The cherry picker would cost $220,000, and it would have an estimated 4-year useful life. The farm uses straight-line depreciation on all assets and considers salvage value in computing depreciation deductions The estimated salvage value of the cherry picker is $85,000. c. Annual out-of-pocket costs associated with the cherry picker would be: cost of an operator and an assistant, $97,000; insurance, $4,000; fuel, $16,000; and a maintenance contract, $22,000. Click here to view Exhibit 13B-1 and Exhibit 13B-2, to determine the appropriate discount factor using tables. Required: 1. Determine the annual savings in cash operating costs that would be realized if the cherry picker were purchased. Answer is complete and correct. Present cost of transient workers 220,000 Less out-of-pocket costs to operate the cherry picker: Fuel Insurance Cost of an operator and assistant Maintenance contract 16,000 4,000 97,000 22,000 139,000 81,000 Annual savings in cash operating costs

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