What are the operating cash flows in each year

Assignment Help Financial Management

Reference no: EM131831987

Johnny’s Lunches is considering purchasing a new, energy-efficient grill. The grill will cost $35,000 and will be depreciated according to the 3-year MACRS schedule. It will be sold for scrap metal after 3 years for $8,750. The grill will have no effect on revenues but will save Johnny’s $17,500 in energy expenses per year. The tax rate is 30%. Use the MACRS depreciation schedule.

a. What are the operating cash flows in each year? (Do not round intermediate calculations. Round your answers to 2 decimal places.)

b. What are the total cash flows in each year? (Do not round intermediate calculations. Round your answers to 2 decimal places.)

c. If the discount rate is 12%, should the grill be purchased? Yes No Reference links 9.2 Calculating Cash Flow opens in a new window.

Reference no: EM131831987

Questions Cloud

What is the initial investment in the product : What is the initial investment in the product? Remember working capital. What is project IRR?

Relationship between monomers and polymers : What is the relationship between monomers and polymers? Give an example using proteins.

Percentage of individuals would be predicted : Two heterozygote tongue rollers (dominant trait) have a child. What percentage of individuals would be predicted to be heterozygotes, homozygous dominant

List examples of action that might benefit from applying PKI : List three examples (other than those listed in the chapter) of everyday actions that might benefit from applying PKI.

What are the operating cash flows in each year : Johnny’s Lunches is considering purchasing a new, energy-efficient grill. What are the operating cash flows in each year?

Prepare the journal entry to record initial transaction : Prepare the journal entry to record the initial transaction on January 1, 2017.

What was the change in net working capital : What was the change in net working capital during the year? If sales were $37,200 and costs were $25,200, what was cash flow for the year?

After-tax cash flow from the sale of the equipment : The firm’s tax rate is 30%. What is the after-tax cash flow from the sale of the equipment?

The age of aids : Mervyn Silverman says, in an interview from Part 1 Age of AIDS that "AIDS was the most political disease I had ever seen or read about."What does he mean?

User Account

All Pages