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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 $20,300 and will be depreciated in
Assume it is January 2018 and Johnny's Lunches is considering purchasing a new, energy-efficient grill. The grill will cost $20,300 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 $6,000. The grill will have no effect on revenues but will save Johnny's $8,600 in energy expenses. The firm has other assets in this asset class. The tax rate is 35%. Assume the discount rate is 12%. 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.) Amount The operating cash flow in year 2018 The operating cash flow in year 2019 The operating cash flow in year 2020 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.) Amount The total cash flow in year 2018 The total cash flow in year 2019 The total cash flow in year 2020 c. If the discount rate is 12%, should the grill be purchased? If the discount rate is 12%, the grill
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