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:

Daytime Television

Television programming that is broadcast during the daytime hours, often targeting audiences at home during the day such as homemakers or the unemployed.

Mass Media

The means of communication that reach large numbers of people, such as newspapers, television, and the internet, influencing public opinion and social norms.

Short-Term Escape

A temporary relief or distraction from daily routine or problems, often through activities or short trips.

Acceptable Boundaries

Agreed-upon limits in relationships or interactions that respect individuals' comfort levels and rights, promoting healthy dynamics.