What are the total cash flows in each year

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Reference no: EM131962831

Johnny's Lunches is considering purchasing a new, energy-efficient grill. The grill will cost $46,000 and will be depreciated according to the 3-year MACRS schedule. It will be sold for scrap metal after 3 years for $11, 500.

The grill will have no effect on revenues but will save Johnny's $23,000 in energy expenses per year. The tax rate is 35%. Use the MACRS depreciation schedule.

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

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.)

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

Reference no: EM131962831

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