Problem 13-24 (REV) Simple Rate of Return; Payback Period; Internal Rate of Return [LO13-1, LO13-3,

Get perfect grades by consistently using Place your order and get a quality paper today. Take advantage of our current 20% discount by using the coupon code GET20

Order a Similar Paper Order a Different Paper

Problem 13-24 (REV) Simple Rate of Return; Payback Period; Internal Rate of Return [LO13-1, LO13-3, LO13-6]

The Elberta Fruit Farm of Ontario always has 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:

  1. Currently, the farm is paying an average of $240,000 per year to transient workers to pick the cherries.
  2. The cherry picker would cost $500,000. It would be depreciated using the straight-line method and it would have no salvage value at the end of its 5-year useful life.
  3. 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 13B-1 and Exhibit 13B-2, to determine the appropriate discount factor using tables.


1. Determine the annual savings in cash operating costs that would be realized if the cherry picker were purchased.

2. Compute the simple rate of return expected from the cherry picker.

3. Compute the payback period on the cherry picker.

4. Compute the internal rate of return promised by the cherry picker.

"Is this question part of your assignment? We can help"


Need help with an assignment? We work for the best interests of our clients. We maintain professionalism and offer brilliant writing services in most of the fields ranging from nursing, philosophy, psychology, biology, finance, accounting, criminal justice, mathematics, computer science, among others. We offer CONFIDENTIAL, ORIGINAL (Turnitin & SafeAssign checks), and PRIVATE services using the latest (within 5 years) peer-reviewed articles. Kindly click on ORDER NOW to receive an A++ paper from our masters- and doctorate-prepared writers. Thank you in advance!

Get a 15% discount on your order using the following coupon code SAVE15

Order a Similar Paper Order a Different Paper