Clients plan to raise corn on this section. They need to purchase a new planter, which costs $52,000, has a useful life of 6 years, and a salvage…

Clients plan to raise corn on this section. They need to purchase a new planter, which costs $52,000, has a useful life of 6 years, and a salvage value of $18,000. Also, need to purchase a sprayer, which costs $125,000, 6-year useful life, and 45,000 salvage value. Expected yield of corn is 95 bushels per acre. One section equals 640 acres. Selling price of corn is $3.08. Clients also need to purchase a liquid fertilizer tool, which costs 83,000, 6-year useful life, and salvage value of 22,000. Chemical cost is $55 per acre. Fertilizer cost is $45 per acre. Seed cost is $17 per acre. Land rent is $45 per acre. Planter insurance is 300 per year, sprayer insurance is 800 per year, and fertilizer tool insurance is 500 per year. Total taxes on all three machines is 1250 per year. Preharvest labor costs are 12.50 per acre. Tractor variable cost is $11 per acre (they already own this tractor and it is paid off so there is no depreciation, interest, taxes, or insurance to calculate on the tractor). Variable cost on other machines and equipment is $4.20 per acre. Custom harvesting cost will be $55 per acre. Compute interest on total preharvest costs at 8% for 6 months. 8% opportunity cost for capital that will be purchased.

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