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
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. Calculate the book value of the grill at the end of year 5. (Round to 2 decimals) Calculate the operating cash flow at the end of year 1. Calculate the net present value.
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