The Elberta Fruit Farm of Ontario always has 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 cherry picker would cost $630,000. It would be depreciated using the straight-ine method and it would have no salvage value at the end of its 10 -year useful iffe. c. Annual out-of-pocket costs associated with the cherry picker would be: cost of an operator and an assistant, $92,000, insurance, $5,000; fuel, \$18,000; and a maintenance contract, $20,000. Ciick here to view Exhibit 781 and Exhibil 7B-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. 2a. Compute the simple rate of return expected from the cherry picker. 26 . Would the cherry picker be purchased if Elberta fruit Farm's required rate of return is 119 ? 3a. Compute the payback period on the cherry picker. 3b. The Elberta Frut Farm will not purchase equipment uniess it has a payback period of six years or less. Would the cherry picker be nuirhacert? a. Currently, the farm is paying an average of $240,000 per year to transient workers to pick the cherries. b. The cherry picker would cost $630,000. It would be depreclated using the straight-line method and it would have no saivage value at the end of its 10 -year useful life. c. Annual out-ot-pocket costs assoclated with the cherry picker would be: cost of an operator and an assistant, $92,000; insurance, $5,000; fuel, $18,000; and a maintenance contract, $20,000. Click here to view Exhibit 78 -1 and Required: to determine the approprlate discount factor using tables. 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 picket. 20. Would the cherry picker be purchased if Eiberta Fruit Farm s required rate of return is 1195 ? 3a Compute the payback period on the cherry picker. 3b. The Eiberta Fruit Farm wili not purchase equipment uniess it has a payback penod of six years or less. Would the cheriy picker be purchased? 4a Compute the internal rate of return promised by the cherry picker. 4b. Based on this computation, does it appear that the simple rate of return is an accurate guicte in investment deeisions