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

question 54

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 NPV of buying the tractors is closest to:

• A)$20,785.
• B)$54,965.
• C)$81,715.
• D)513,235.
• E)$560,785.

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Definitions:

Partnership

A legal and business arrangement between two or more individuals who share management and profits or losses of the business endeavor.

Regulatory Controls

Rules and regulations established by government or regulatory bodies to control the way businesses operate, ensuring safety, fairness, and compliance.