Casa Grande Farms is considering purchasing multiple tractors for a total purchase price of $540,000....
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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:
$20,785.
$81,715.
$560,785.
$54,965.
$513,235.
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