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Assume it is January 2018 and Johnny's Lunches is considering purchasing a new, energy-efficient grill. The grill will cost $19,200 and will be depreciated
Assume it is January 2018 and Johnny's Lunches is considering purchasing a new, energy-efficient grill. The grill will cost $19,200 and will be depreciated in an asset class that carries a CCA rate of 30%. It will be sold for scrap metal after 3 years for $5,600. The grill will have no effect on revenues but will save Johnny's $10,200 in energy expenses. The firm has other assets in this asset class. The tax rate is 35%. Assume the discount rate is 6%. a. What are the operating cash flows in years 1 to 3? (Do not round intermediate calculations. Round your answers to the nearest whole dollar.) The operating cash flow in year 2018 The operating cash flow in year 2019 The operating cash flow in year 2020 Amount b. What are total cash flows in years 1 to 3? (Do not round intermediate calculations. Round your answers to the nearest whole dollar. Enter negative values with a minus sign.) The total cash flow in year 2018 The total cash flow in year 2019 The total cash flow in year 2020 Amount c. If the discount rate is 6%, should the grill be purchased? If the discount rate is 6%, the grill
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