Using data from the Anthonys Orchards website draft a memo t

Using data from the Anthony\'s Orchards website, draft a memo to the chief financial officer (CFO) of the company defending whether the company should or should not purchase an apple press to make apple juice for Anthony\'s Orchards fruit production facility. Does it make sense to add this piece of equipment now or postpone the purchase? As part of your response, calculate the ROI/ARR (accounting rate of return), payback, and IRR methods. Also, determine which method is most appropriate for making this decision and defend your choice. Below is the link for Anthony\'s Orchard. http://mym.cdn.laureate-media.com/2dett4d/Walden/ACCT/6130/mm/Anthonys_Orchard_Website-PDF%20format.pdf

Solution

Answer:

The project has the following cash flows:

1st quarter $500,000

2nd quarter $500,000

3rd quarter $500,000

4th quarter $1,385,663

Initial investment = $950,000