What are the operating cash flows in each year

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Reference no: EM13924608

Johnny’s Lunches is considering purchasing a new, energy-efficient grill. The grill will cost $43,000 and will be depreciated according to the 3-year MACRS schedule. It will be sold for scrap metal after 3 years for $10,750. The grill will have no effect on revenues but will save Johnny’s $21,500 in energy expenses. 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.)

Year Operating Cash Flows

1 $

2 $

3 $

b. What are the total cash flows in each year? (Negative amounts should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to 2 decimal places.)

Time Total Cash Flows

0 $

1 $

2 $

3 $

c. If the discount rate is 12%, should the grill be purchased? Yes or No

Reference no: EM13924608

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