Johnny's Lunches is considering purchasing a new,energy-efficient grill. Thegrill will cost $45,000andwillbe depreciated straight-line over 3 years.It willbe sold for scrap metal after 5 years for $11,250. Thegrill willhave no effect on revenues butwillsaveJohnny's$22,500 inenergy expenses.

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 10% calculate the net present value (NPV) of the cash flow streams. Should the grill be purchased?