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A year ago
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
Textbook 
Corporate Finance: The Core
Edition: 4th
Authors:
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wrote...
A year ago
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
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