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

question 26

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%.
-Assume that Casa Grande Farms is planning to sell the tractors after two years,when their book value is $119,988,for a total price of $180,000.What is the effect on free cash flow in the year they are sold?

• A)A cash inflow of $60,012
• B)A cash outflow of $60,012
• C)A cash inflow of $47,949
• D)A cash outflow of $47,949

Learn techniques for dealing with difficult conversations and individuals.

Identify the roles of team leaders and managers in resolving conflicts.

Understand the importance of problem-solving and compromise in conflict resolution.

Understand the differences between job order costing and process costing systems.

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Definitions:

Employee Stock Options

A type of compensation given to employees, offering the right to purchase company stock at a specific price within a set period.

Call Options

Financial contracts giving the buyer the right, but not the obligation, to buy a stock, bond, commodity, or other asset at a specified price within a specific time period.

Preferred Stock

A class of ownership in a corporation with a fixed dividend that is paid before any dividends are paid to common stockholders, typically without voting rights.

Common Stock

Shares of ownership in a corporation, giving holders voting rights and a share in the company's profits through dividends, subject to business performance.