The Eiberta Fruit Farm of Ontario has aiways hired transient workers to pick its annual cherry crop. Janessa Wright, the farm manager, just recelved 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 $240,000 per year to transient workers to pick the cherries. b. The chetry picker would cost $500,000. It would be depreclated using the stralght-line method and it would have no salvage value at the end of its 5 -year useful life. c. Annual out-of.pocket costs associated with the cherry picker would be: cost of an operator and an assistant, $79,000; insurance. $3,000; fuel, $11,000, and a maintenance contract $14,000 Click here to view Exhibit 148-1 and Exhibit 148-2, to determine the appropriate discount factor using tobles. Required: 1. Determine the annual savings in cash operating costs that would be realized if the cherry picker were purchased. 2a. Compute the simple rate of return expected from the cherry picked. 2b. Would the cherty picker be purchased if Elberta Fruit Farm's required rate of return is 15% ? 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 four years or less. Would the cherry picker be purchased? 4a. Compute the internal rate of retum promised by the cherry picker. 4b. 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. Determine the annual savings in cash operoting costs that would be realized if the cherry picker were purchased. Complete this question by entering your answers in the tabs below. Determine the annual savings in cash operating costs that would be realized if the cherry picker were purchased. Complete this question by entering your answers in the tabs below. Compute the simple rate of return expected from the cherry picker. (Round your answer to 2 decimal places.) 4b. Based on this computation, does it appear that the simple rate of return is an accurate guide in investment deci Complete this question by entering your answers in the tabs below. Would the cherry picker be purchased if Elberta Fruit Farm's required rate of return is 15% ? Complete this question by entering your answers in the tabs below. Compute the payback period on the cherry picker. (Round your answer to 2 decimal places.) Complete this question by entering your answers in the tabs below. The Elberta Fruit Farm will not purchase equipment unless it has a payback period of four years or less. Would the cherry picker be purchased? Complete this question by entering your answers in the tabs below. Compute the internal rate of return promised by the cherry picker. (Round your answer to the nearest whole percent.) Complete this question by entering your answers in the tabs below. Based on this computation, does it appear that the simple rate of return is an accurate guide in investment decisions
