Problem 14-24 (Algo) Simple Rate of Return; Payback Period; Internal Rate of Return (L014-1, L014-3, LO14-6) The Elberta Fruit Farm of Ontario has always hired transient workers to pick its annual cherry crop. Janessa Wright, the farm manager 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 $210,000 per year to transient workers to pick the cherries. b. The cherry picker would cost $550,000. It would be depreciated using the straight-line method and it would have no salvage value at the end of its 8-year useful life. c. Annual out-of-pocket costs associated with the cherry picker would be cost of an operator and an assistant, $95,000; insurance, $4,000; fuel. $12,000; and a maintenance contract, $15,000. Click here to view Exhibit 14B-1 and Exhibit 148-2. 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. 20. Compute the simple rate of return expected from the cherry picker. 2b. Would the cherry picker be purchased if Elberta Fruit Farm's required rate of return is 9%? 3a. Compute the payback period on the cherry picker. 3b. The Elberta Fruit Farm will not purchase equipment unless it has a payback period of seven years or less. Would the cherry picker be purchased? 4a. Compute the internal rate of return promised by the cherry picker. 46. Based on this computation does it appear that the simple rate of return is an accurate guide in investment decisions? Complete this question by entering your answers in the tabs below. Reg 1 Reg 2A Reg 28 Reg 3A Reg 38 Reg 4 Reg 4B Based on this computation, does it appear that the simple rate of return is an accurate guide in investment decisions? ECHIMIT 1484 Prezent Value of the 10N Periods 4 5 6 9% 13 109 169 19 20% 22 23 24 1 0.962 0.952 0943 0.905 0.926 090 0.909 0.9010393 0.885 0700170 0.362 0355 0347 0.040 0.8330526 0.820 0.00 0.006 0.800 2 0.925 0.90708900373 0.857 0.042 0.326 0.812 0.797 0.783 0.769 0.756 0743 0731 0.7180.706 06940683 0672 0.661 0.650 0640 2 0.009 0064 0.040 0.116 0.704 0772 0.751 0731 0712 0.693 0.675 0658 0641 0.6240609 0.593 05790.564 0551 0.537 0.524 0.512 4 0855 08230.792 0.763 0735 0.708 0.663 0.6590636 063 0.592 0572 0.552 0534 05160499 0.482 0.467 0451 0.437 0423 0.410 5 0.022 0.704 0747 0713 0681 0.650 0621 05900567 053 05190.497 0.4760456 0.37 0.419 0.402 0.306 0.370 0355 0.3410328 6 0.790 0.745 0.705 0.666 0.630 0.596 0.564 0.535 0.507 0.400 0.456 0.02 0.410 0.390 03700352 0.335 0.319 0.303 0.209 0275 0.262 7 0700011 0.665 0.623 0.5830.547 0.50 0.42 0.452 0.425 0.400 0.376 0354 0333 0.314 0.296 0.2790 263 0.249 0.2350222 0.210 0731 0.677 0.627 0.587 0.50 0.502 0.467 0.434 0.404 0.378 0.351 0.327 03050 2050 206 0249 0233 0.218 0204 0191 0.179 0168 9 07030645 0.592 0544 0.500 0.400 0.424 0.391 0.361 0.333 0.308 0284 0.263 0.24 0.225 0.209 0.194 01800167 0155 0144 0.134 10 0.676 0.614 0.550 0.500 0.45 0.422 0.336 0.352 0.322 0295 02700247 0227 0.2080191 0176 0.162 0.149 0107 0.126 0116 0.107 11 0.650 0.585 0.52) 0475 0.4290388 0.350 0317 0.287 0201 0.237 0.215 0.1950178 0162 0548 0.135 0123 0.112 0.103 0.094 0.086 12 0.625 0.557 0.497 0.444 0.997 0.356 0.319 0.286 0.257 0.21 0.200 0187 0.168 0152017 0124 0112 0.1020092 0.083 0.0700069 0.601 0530 0.400 0.45 0.368 0.326 0.250 0.258 0.229 0.204 0.12 0.163 044501300116 0104 0.093 0084 0.075 0.068 0.001 0.055 14 0.57% 0.505 0.412 0.388 0.340 0.299 0.263 0232 0.205 0,981 0.100 011 0125 0.111 0099 0.008 0.078 0.009 0.062 0.055 0.049 0.066 15 0555 0.41 0.417 0.362 0.315 0.275 0.229 0.209 0333 0.16003400123 300 0,095 0004 0024 0.065 0.05700510045 0.040 0.035 16 0.534 0.453 0.394 0.39 0.292 0.252 02180189 0163545 0123 08070093 0.08100710002 0.054 0.047 0.042 0.035 0.032 0.028 17 0.50 0.430 0.371 0.17 0.270 0.2310190 0170 0.146 0.125 0100 0000 0.000 0.00000600052 0045 0.030 0.034 0.030 0.025 0.023 Til 0.494 0.416 0.350 0.20 0.250 0.212 0.10 0.153 0.13001 0.095 0.001 0.000 0.0590051 0.044 0.033 0032 0.028 0.024 0.021 0.018 19 0.475 096 0.331 0.277 0.232 0.194 0.164 0.08 0.18 0.008 0.083 00700000 0.0510043 0.097 0.031 0.027 0.023 0.020 001 0.014 0.456 0377 0.312 0.250 0.215 0.17 0.549 0124 0.04 0.087 0.073 0.001 0.05100430037 0.031 0.026 0022 0.019 0.0160.01 0.012 21 0.439 0.159 0.294 0.22 0.1990.164 0135 0.112 0.093 007 0064 005 0044 0.0370031 0026 0.022 0.018 0.015 0.013001 0.009 0.422 0.342 0.2700226 0.184 0.150 0123 0.101 0.000 0.000 0.056 0.046 0.033 00320026 0022 0.018 0,015 0,013 0011 0.0090007 0.406 0:326 0202 0.21 0.170 0.13 0.112 0.0910094 0000 00400040 0.033 0.027 0022 0010 0015 0.012 0010 0.000 0.007 0.000 24 0.390 03100247 0107 0.150 0126 0102 0012 0006 0.053 0043 0.005 0028 0.0230019 0015 000 0010 0000 0.007 0.006 0.005 0.375 0.2050230 0.1040146 0.116 0.092 001400590047 0038 0.0300024 0.020 0010013 0010 0.000 0.007 0.008 0.005 0.004 26 0361 0.21 0.220 0172 0135 0106 0064 0.006 0053 0042 0033 0020002100170054 0.01 0.000 0.00 0.00 0.005 0.004 0.003 27 0.347 0.268 0.207 0561 0.125 0.00 0.00 0.000 0.007 0037 0.029 0023 0.0100014 0011 0009 0.007 0.006 0.005 0.004 0.003 0.002 20 0331 0.255 0.16 0.1500116 0090 0000 0054 0012 003 0026 0.02000160012 0010 0000 0000 0005 0004 0.003 0.002 0.002 29 0.321 020 0105 0 141 0.100 0.002 0000 004 003 0029 0,022 0.017 0014001 0000 0.000 0.005 0.004 0.003 0.002 0.002 0.002 30 0308 0.22 0174 0.131 0.099 0.075 0057 0.0440033 0026 0.020 0,015 0.012 0009 0.007 0.005 0.004 0.003 0.003 0.002 0.002 0.001 40 0208 0142 0.097 0067 004 0.032 0.022 0.095 00 0.008 0.005 0.004 0000 0002 0.001 0.001 0001 0.000 0.000 0.000 0.000 0.000 WOMIT 1902 Present Value of an Annuity et 1 m Arrow [-] 1 3 4 5 7 9 10 11 12 14 15 16 17 0 105 UN 15 165 173 19 20% 21 22 23 251 0.96 0.652 0.93 0.95 0.920 0.977 0.900 0001 0.00 0.895 0.877 0.870 0.362 0.855 0.847 0340 083 0826 0.820 00 0.00 0300 1888 LESO 1823 1308 1980 1750 1738 173 1090 1.668 1647 1626 1605585 1566 1547 1.528 1509 1492 1474 1.457 1410 2.775 2.670 2624 2.577 2.531 2487 2444 2402 2361 2.322 2283 2246 2.210 2114 2140 2.106 2074 2042 2011 1981 1952 3630 1548 3307 230 2.240 3.170 3302 3.037 2.078 294 2855 2.700 270 2.000 2.630 2500 2540 2494 2440 2.404 2362 2452 4120 4100 3.990 3.890 3.791 3.696 3605 1517 3.433 2352 3274 3199 3127 3.058 2.991 2926 2.884 2003 2.745 2.599 5.242 5.0764977 4767 4.623 2486 4355 4231 4m 3.998 3.89 3.784 3.605 3589 3.498 34103320 3245 3157 3092 3.020 2951 6.002 5.786 5.00 5.2005.030 4.0604712 4.564 4423 4253 4560 4.030 3922 3.812 37063.005 3.508 3.416 3.327 3.2423.101 6.463 6.210 5971 5.70 5.33555464.968 47994639 487 43444207 40793954 3.837 3726 3.619 3518 3.421 3329 7435 2100 6.802 6515 6.20 5.995 5.750 3.537 5.3285132 4.946 472 4.607 4451 4300 4103 4,031 3.905 3.786 36733566 3.463 7360 2024 6.710 6.410 6.455.889 5650 5425 524 5019 4,833 4659 4494 43394192 4054 2922 3799 1682 1571 8.750 8.306 2887 7499 2.009 6.805 6.495 6.207 5.938 5687 5.453 5234 5.029 4836 4.656 4 436 437 4177 4035 3902 37763656 93858.863 3.334 7943 7536 7161 6.814 6.4926.194 5.918 5660 5.421 5.197 4988 4793 4011 4.439 4.2784127 3.985 3.6513725 9.986 9294 8.853 8.358 7.900 7487 7103 6.750 642 6122 5.342 5.50 5.342 518 4.910 4715 4.533 4.362 4203 4053 3.912 3780 10561 9.999 9.295 0.745 8.244 7996 7.367 6.902 6628 6302 6.002 5724 508 5229 5.008 4.802 4611 4432 4265 4108 3.962 3.824 10.380 9.712 900 8.550 7600 7190 6.811 6.462 6.142 5.347 5.575 5326 5.092 4.8764.675 4.489 4.315 4.001 3859 11652 10,833 10106 9.447 8851 8.313 78247379 6.974 6604 6.265 5954 5668 5.405 5162 49304730 4506 4357 4109 4.033 3587 12.156 11274 10.17 9122 8544 3.02275497120 6729 6.373 6.047 5749 5.475 5.222 4990 4.775 4575 4391 4219 4059 1910 12.650 1.000 10.820 10.050 9.372 8.756 201 2702 7.250 6.340 6.4076128 5.8985534 5.2735033 4812 4608 4.419 424340803920 134 12.005 1158 10336 9.000 950 3365 7819 2356 6938 65506198 5877 5584 5:316 5.070 4843 4635 4442 4263 4097 2942 13500 12.462 11.470 105949.00 9.129 8.514 7963 746970256,623 62595.9295628 5.353 5101 4.870 4657 44604279 4.110 12.029 12.821 11764 10.836 10.017 9.292 8.649 3.0757562 7102 0.0876.3125.973 5665 5384 5127 4.091 4675 44754292 4.121 31503 N145113.163 12.042 11.061 10.201 9442 8.7728.176 7645 2170 6706359 0.01 5696 54905149 4.909 4090 4.40 4302 400 3970 14057 13.40912300 11272 10.371 9580 8.883 8.266 2718 2230 6792 6.399 6044 57235.432 5167 4.925 4703 4,499 4311 4.137 3.976 15:247 1399 12.550 1460 10.529 9707 1905 834077042200 6.835 6.4346.073 5740 5.451 5102 4937 4713 4507 43184143 3901 15 622 1409412783 1654 10,675 9.623 9.077842278437330 6.873 6464 6.097 5766 5467 51954.948 4721 4514 4323 4147 3.965 15983 14375300) 11826 10.810 9929 9161 8.488 78967372 6.900 6491 6118 5.783 5.480 5206 4956 4728 4520 4320 4151 3.988 16.110 14.6433.211 1197 10 935 10.027 9.2371548790374096 935 6,514 6136 5.790 5.4925215 4964 4734 4.524 43324154990 16.663 490.406 12137 11051 10.116 9.307 3.602 7954 7441 6.961 6,534 6.152 5.810 5.502 5223 4,970 4739 4.528 4335 4157 3992 1693415541 13591 12 278 1156 10.1989.37086508.072 7470 6.903 6551 6166 5820 5.50 5.229 4.975 4743 4531 433741593994 12.292 15.372 705 12.000 11.25 10.274 9.427 8.694 8.05574967000 6.566 6177 5329 5517 5.235 4979 4746 4534 433941603995 1970 1959 15.045 13.332 79250757 97293951 8244 7634 71056,642 6.2335871 55485258 4.997 4760 4544 4347 4166 3999 19 20 21 22 24 25 26 27 28 29 30 40