Question
1. Bubba Company reported net income of $300 million for the most recent fiscal year. The firm had depreciation expenses of $125 million and capital
1. Bubba Company reported net income of $300 million for the most recent fiscal year. The firm had depreciation expenses of $125 million and capital expenditures of $150 million. Although they had no interest expense, the firm did have an increase in net working capital of $20 million. What is Bubba's free cash flow? 2. 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 30% 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 what is the NPV of buying the tractors?
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