sert Format Tools Table Window Help Acade Code Heading 2 Title No Spacing 5. Chapter 13 Assignment - Saved to my Mac Layout References Mailings Review View Tell me - A A Aa ASE 211 AalbCcDc ABCDE Aalbi A. 2. A. == = =, OH, Case study: Healthy Vegetable Producers Healthy Vegetable Producers grow a variety of vegetables to sell to a major processing plant. John Brady, the new manager of Healthy Vegetable, is considering several changes in the business, including the purchase of a new harvesting machine that can dramatically reduce the number workers the firm employs at harvest. Perhaps you can help John by applying some of the decision tools discussed in this chapter to the decisions he faces. The cost of the new harvesting machine is $450,000, with an expected life of five years. The machine is very specialized, so it not expected to have any appreciable salvage value. However, there will be significant labor savings involved. Initially, the new equipment will require little maintenance and repair, but as it gets older, the cost of maintenance and repairs will go up sharply. Generally, the owners and management of Healthy Vegetable Producers feel that a 12 percent return should be expected from any new investment project before it can be undertaken. In addition, they would like a payback period of less than three years and a simple rate of return of at least 25 percent. Expected net cash flow before depreciation resulting from the investment and estimated depreciation expenses are shown in Table 13.10. Table 13.10 Estimated net profit and depreciation expense for new harvesting equipment Net Profit Before Depreciation Depreciation $275,000 $90,000 250,000 90,000 225,000 90,000 175.000 Year I 1 2 3 4 90.000 Focus English United States 02 MacBook Air + AaB A-- Todo en deprecipe wingu Net Bron 175.000 250,000 90.000 3 90.000 221.000 17 16.000 000 * Netherland Quest Initially, reykt, what is your place Vegale vode in the 2. What the parent 1. What the operate of return for this Boo Mook # 2 1 0 5 B W E R T Y U o 5 D F G H K L X V B N N M M & COM Wirden JO. Dhamma VO RAA AaBbe AGE Chapter 1 AN Do 2003 Wed 4. What is the net present value of this investment in the 15 per mire required by the What are the limitation of each of these methode le the floslalysis, de you believe this investat project would be good for Vegetable Prices? Why or what? 7. Uning financial cultura predsheet, determine the internal rate of return for the nement Q03.D MacBook Air 4 90 -0 2 . 5 3 4 7 B W E R T Y U o P S D F G H L V X c V B N N . V. . mand Comond