Question
Fuzzy Restaurant is considering the purchase of a $1,500,000 flat top grill.The grill has an economic life of 8 years and will be fully depreciated
Fuzzy Restaurant is considering the purchase of a $1,500,000 flat top grill.The grill has an economic life of 8 years and will be fully depreciated using straight line method.The grill is expected to produce 59,000 tacos per year for the next 8 years, with each costing $1.50 to make and priced at $5.Assume the discount rate is 8% and the tax rate is 21%. The restaurant expects the market value of the grill to be $200,000, 8 years from now.
A) Calculate the initial cash outflow for the grill (e.g. the time 0 cash flow). (Enter a negative value and round to 2 decimals)
B) Calculate the operating cash flow at the end of year 1. (Enter a negative value and round to 2 decimals)
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