Johnny's Lunches is considering purchasing a new, energy-efficient grill. The grill will cost $49,000 and will bedepreciated straight-line over 3 years. It will be sold for scrap metal after 5 years for $12,250. The grill will have no effect on revenues but will save Johnny's $24,500 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 12%, calculate the net present value (NPV) of the cash flow stream. Should the grill be purchased?

Required A

Year operating Cash flow

1

2

3

Required B

What are the total cash flows in each year? (Negativeamounts should be indicated with a minus sign. Do not round intermediate calculations. Round your answers to 2 decimal places.)

Time Total cash flows

0

1

2

3

Required C

Assuming the discount rate is 12%, calculate the net present value (NPV) of the cash flow stream. Should the grill be purchased?(Do not round intermediate calculations. Round your answer to 2 decimal places.)

NPV of cash flow stream

Should the grill be purchased?