Title: Assume that Casa Grande Farms is planning to sell the tractors after two years, when its book value ... Post by: johnpaech on Nov 19, 2017 Assume that Casa Grande Farms is planning to sell the tractors after two years, when its book value is $119,988, for a total price of $180,000. What is the effect on free cash flow in the year it is sold?
A) A cash inflow of $60,012 B) A cash outflow of $60,012 C) A cash inflow of $39,008 D) A cash outflow of $39,008 Title: Re: Assume that Casa Grande Farms is planning to sell the tractors after two years, when its book ... Post by: deusmaroto on Nov 19, 2017 C
Explanation: C) Gain on sale = $180,000 - $119,988 = $60,012; tax on gain = 0.35 × 60,012 = 21,004 Cash inflow = $60,012 - 21,004 = $39,008 |