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

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Definitions:

Decertify

The process through which a union is officially stripped of its status as the representative of a group of workers, often following a vote among the workers themselves.

NLRB

Stands for the National Labor Relations Board, a federal agency in the United States that enforces labor laws in relation to collective bargaining and unfair labor practices.

Decertification Election

A voting process in which employees can remove union representation from their workplace.

Authorization Cards

Authorization cards are signed by employees to indicate their desire for a labor union to represent them; these cards can trigger a formal representation election if a sufficient percentage of workers sign.