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What are the operating cash flows in each year

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Question - Johnny's Lunches is considering purchasing a new, energy-ef?cient grill. The grill will cost $47,000 and will be depreciated straight- line 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?

Reference no: EM133167275

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