Johnny's Lunches is considering purchasing a new, energy-efficient grill. The grill will cost $48,000 and will bedepreciated

Fantastic news! We've Found the answer you've been seeking!

Question:

Johnny's Lunches is considering purchasing a new, energy-efficient grill. The grill will cost $48,000 and will bedepreciated straight-line over 3 years. It will be sold for scrap metal after 5 years for $12,000. The grill will have no effect on revenues but will save Johnny's $24,000 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?

Posted Date: May 18, 2024 08:13 AM

See More Questions

2. A firm's or cash flow, is its profits after deductions for all expenses, including or wear and tear on capital goods such as machinery.
Rainer Bike Corp. manufactures mountain bikes and distributes them through retail outlets in Oregon and Washington. Rainer Bike Corp. has declared the following annual dividends over a six-year...
A food company produces tomato sauce at five different plants. The tomato sauce is then shipped to one of three warehouses, where it is stored until it is shipped to one of the companys four...
What does the times-interest-earned ratio indicate and how is it calculated?
Jill operates a sporting goods store in a rented location at a shopping mall. She is insured under a CGL policy with the following limits: General aggregate limit ............. $1,000,000...
You purchased thirty Bill Baily call option contracts when the option was quoted at $2.23.The option expires today and the strike price is $20.60.If the value of the stock today is $23.80, what is...
What is the current ratio of Nezuko Inc.? 2. What is the Acid-test ratio of Nezuko Inc. 3. Compute for the ratio that measures how quickly Nezuko Inc. inventory converted into sales 4. Compute for...
The project criteria outlined in Table 9.5 was provided for a sample problem. What other criteria might be a useful part of the more general case of project portfolio management? Project criteria...
What are the stages in the classic consumer decision-making model?
Over the range of cylindrical parts manufactured on a computer-controlled lathe, the standard deviation of the diameters is 0.002 millimeter. (a) What does Chebyshev's theorem tell us about the...
Find the phase voltages $V_{a n}, V_{b n}$, and $V_{c n}$ whose sequence components are: $V_{0}=50 / 80^{\circ}, V_{1}=100 / 0^{\circ}, V_{2}=50 / 90^{\circ} \mathrm{V}$.
Can you name five types of channels of communication?
A square garden with an area of 196ft^(2) needs fencing around it. If fencing cost $2,25 per foot, how much will it cost to purchase fencing?
1. As a general strategy, would you recommend that Carl take an aggressive approach to capacity expansion or more of a wait-and-see approach? 2. Should Carl go with the option for one facility that...
What is the purpose of each of the following control activities? a. documenting the return of any scrapped products to inventory stores b. using an MPS to schedule production c. periodically counting...
What are the advantages and disadvantages of continuous improvement performance reports? Why do you think some companies adopt this philosophy, but others do not?
The XYZ company sells approximately 900,000 gizmos annually. Each gizmo consists of 15 components. Management is currently evaluating which vendor to choose as the primary supplier of one of the...

Johnny's Lunches is considering purchasing a new, energy-efficient grill. The grill will cost $48,000 and will bedepreciated

Question:

Expert Answer:

Students also viewed these finance questions