Homework answers / question archive / Casa Grande Farms is considering purchasing multiple tractors for a total purchase price of $540 000

Casa Grande Farms is considering purchasing multiple tractors for a total purchase price of $540 000

Business

Share With

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 net cash flow from this sale?