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Casa Grande Farms is considering purchasing multiple tractors for a total purchase price of $ 5 4 0 , 0 0 0 . These tractors

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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