Question: 5. 5. value 1.00 points Problem 9-10 Cash Flows and NPV (LO2) Johnny's Lunches is considering purchasing a new, energy- efficient grill. The grill will
5. 5. value 1.00 points Problem 9-10 Cash Flows and NPV (LO2) Johnny's Lunches is considering purchasing a new, energy- efficient grill. The grill will cost $40,000 and will be depreciated according to the 3-year MACRS schedule. It will be sold for scrap metal after 3 years for $10,000. The grill will have no effect on revenues but will save Johnny's $20,000 in energy expenses per year. The tax rate is 35%. Use the MACRS depreciation schedule. - What are the operating cash flows in each year? (Do not round intermediate calculations. Round your answers to 2 decimal places.) Year Operating Cash Flows 1 $ 2 5. What are the total cash flows in each year? (Negative amounts should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to 2 decimal places.) Time 0 Total Cash Flows $ 1 6. If the discount rate is 12%, should the grill be purchased? Yes OO No
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