Johnny's Lunches is considering purchasing a new, energy-efficient grill. The grill will cost $47,000 and...

50.1K

Verified Solution

Question

Finance

image
image
image
Johnny's Lunches is considering purchasing a new, energy-efficient grill. The grill will cost $47,000 and will be depreciated straightline 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 Johnny's $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? Complete this question by entering your answers in the tabs below. What are the operating cash flows in each year? Note: Do not round intermediate calculations. Round your answers to 2 decimal places. Complete this question by entering your answers in the tabs below. 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. Complete this question by entering your answers in the tabs below. Assuming the discount rate is 11%, 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

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students