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Transcription of this question: 6.Organix has, for many years, relied on employing seasonal unskilled labour for the harvesting Oftheir fruit and vegetables. These workers have been paid on a piece rate basis. Oyganix has found itincreasingly difficult to recruit this labour and is considering the purchase Of harvesting machinery,which will replace the majority Of the seasonal unskilled labour They are considering two models:the Harvester and the PicklT_ The Harvester requires a more substantial investment, but is moreflexible and will enable them to pick 65 % of their crops. In addition it is easier to operate and involvesless training. The PicklT is cheaper to purchase and maintain, has a longer expected life span, but isonly capable Of picking 45 % Of their crops.MachineHarvesterPicklTYear234Investment cost (SOOO)245170ed net cash flowsHarvester55657585PicklT3550607085Assuming a discount rate Of 8 0/0, the discount factors for 5 years would be:Year 1Year 2Year 3Year 4Year 50.9260.8570.7940.7350.681(a)(b)(c)(d)Identify two variable costs that the Organix farm incurs.Comment on the likely impact on the cost structure Of Olganix if the newharvesting machinery is purchased.Calculate the payback period and net present value for both the Harvester andPicklT machines using a discount rate Of 80/0. (Show all your working)Taking into account financial and non-financial factors, recommend whetherO’ganix should invest in the Harvester or the PicklT.[2 marks][4 marks][6 marks][8 marks]

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