Multiple Choice
Use the following information to answer the question(s) below.
(Include the MACRS Table from the Appendix. )
Casa Grande Farms is considering purchasing multiple tractors for a total purchase price of $540,000.These tractors are expected to generate EBITDA of $250,000 for each of the next three years.Casa Grande Farms has a 21% tax rate and has a cost of capital of 10%.
-Assuming that Casa Grande Farms depreciates these tractors straight line over the three-year life,then the NPV of buying the tractors is closest to:
A) $45,156.
B) $36,225.
C) $81,715.
D) $513,235.
Correct Answer:

Verified
Correct Answer:
Verified
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