Examlex
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 35% tax rate and has a cost of capital of 10%.
-Assuming that Casa Grande Farms depreciates these tractors straight line over the three year life,then the NPV of buying the tractors is closest to:
Availability Delay
The lag time between when a deposit is made in a bank account and when the funds are available for use.
Bank Releases
Legal documents indicating that a bank has released its claim on assets, typically after a loan has been paid off.
Collection Time
The typical duration a company waits to collect payments from its clients following a sale.
Lockbox System
A service offered by banks to process payments quickly by having those payments mailed directly to a secure post-office box, from which the bank collects and deposits into the company's account.
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