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

question 37

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 35% 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)36,225
• C)81,715
• D)513,235
• E)560,785

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Definitions:

Technological Change

The process of innovation and improvement in technology, which often leads to increased efficiency and productivity within an industry or economy.

Unemployment Rates

Unemployment Rates represent the percentage of the labor force that is jobless and actively seeking employment.

Breakthrough

A significant or sudden advance or discovery that contributes to progress in a particular field.

Labor Needed

The amount of workforce or manpower required to complete a task, fulfill a job, or achieve a production goal.