Question: Item6 1 points eBookPrintCheck my workCheck My Work button is now enabled4Item 6 Johnnys Lunches is considering purchasing a new, energy-efficient grill. The grill will

Item6 1 points eBookPrintCheck my workCheck My Work button is now enabled4Item 6 Johnnys Lunches is considering purchasing a new, energy-efficient grill. The grill will cost $47,000 and will be depreciated straight-line over 3 years. It will be sold for scrap metal after 5 years for $11,750. The grill will have no effect on revenues but will save Johnnys $23,500 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 11%, calculate the net present value (NPV) of the cash flow stream. Should the grill be purchased?

Required:

a. What are the operating cash flows in each year? (year 1,2,&3) b. What are the total cash flows in each year? (year 0,1,2,3) c. Assuming the discount rate is 11%, calculate the net present value (NPV) of the cash flow stream. Should the grill be purchased?

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