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Johnny's Lunches is considering purchasing a new, energy - efficient grill. The grill will cost $ 4 5 , 0 0 0 and will be

Johnny's Lunches is considering purchasing a new, energy-efficient grill. The grill will cost $45,000 and will be depreciated straight-
line over 3 years. It will be sold for scrap metal after 5 years for $11,250. The grill will have no effect on revenues but will save Johnny's
$22,500 in energy expenses. The tax rate is 30%.
Required:
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 stream. Should the grill be purchased?
Complete this question by entering your answers in the tabs below.
Required B
What are the operating cash flows in each year?
Note: Do not round intermediate calculations. Round your answers to 2 decimal places.
Required A
Required C
What are the total cash flows in each year?
Note: Negative amounts should be indicated with a minus sign. Do not round intermediate calculations. Round your answers
to 2 decimal places.
Assuming the discount rate is 10%, calculate the net present value (NPV) of the cash flow stream. Should the grill be
purchased?
Note: Do not round intermediate calculations. Round your answer to 2 decimal places.
NPV of cash flow stream
Should the grill be purchased?
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