Question: ces Johnny's Lunches is considering purchasing a new, energy-efficient grill. The grill will cost $39,000 and will be depreciated straight- line over 3 years.


ces Johnny's Lunches is considering purchasing a new, energy-efficient grill. The grill will cost $39,000 and will be depreciated straight- line over 3 years. It will be sold for scrap metal after 5 years for $9,750. The grill will have no effect on revenues but will save Johnny's $19,500 in energy expenses. The tax rate is 30%. Required: a. What are the operating cash flows in each year? b. What are the total cash flows in each year? c. Assuming the discount rate is 10%, calculate the net present value (NPV) of the cash flow stream. Should the grill be purchased? Complete this question by entering your answers in the tabs below. Required A Required B Required C What are the operating cash flows in each year? Note: Do not round intermediate calculations. Round your answers to 2 decimal places. Year 0 1 2 3 4 5 Operating Cash Flows $ (39,000.00) nces Complete this question by entering your answers in the tabs below. Required A Required B Required C What are the total cash flows in each year? Note: Negative amounts should be indicated with a minus sign. Do not round intermediate calculations. Round your answers to 2 decimal places. Total Cash Flows Time 0 1 -2345 5 tes Complete this question by entering your answers in the tabs below. Required A Required B Required C Assuming the discount rate is 10%, calculate the net present value (NPV) of the cash flow stream. Should the grill be purchased? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. NPV of cash flow streami Should the grill be purchased?
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Time line 0 1 2 3 4 5 Cost of new machine 39000 Initial Investment outlay 39000 10000 ... View full answer
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