Use the Following Information to Answer the Question(s)below

question 14

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 using MACRS depreciation method for three-year property starting immediately,then the annual depreciation tax shield in year 2 is closest to:

• A)$20,785.
• B)$16,795.
• C)$84,000.
• D)$180,000.

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Definitions:

Avoidance Learning

A process in behavioral psychology where a subject learns to prevent or avoid an unpleasant stimulus by making particular responses.

Learned Helplessness

A condition where individuals learn to believe that they have no control over their situation, often leading to a lack of motivation and depression.

Extinction Learning

A process in cognitive psychology and behavioral therapy where a conditioned response gradually diminishes and eventually disappears as the conditioned stimulus is no longer paired with an unconditioned stimulus.

Generalized Learning

The process through which skills or knowledge learned in one context or situation are applied to different but related contexts or situations.