Johnny's Lunches is considering purchasing a new, energy-efficient grill. The grill will cost $32,000 and will bedepreciated straight-line over 3 years. It will be sold for scrap metal after 5 years for $8,000. The grill will have no effect on revenues but will save Johnny's $16,000 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?

Johnny's Lunches is considering purchasing a new, energy-efficient grill. The grill will cost $32,000 and will bedepreciated straight-line over 3 years. It will be sold for scrap metal after 5 years for $8,000. The grill will have no effect on revenues but will save Johnny's $16,000 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?

question A year 1- (operating cash flow?)

question A year 2-(operating cash flow?)

question A year 3- (operating cash flow?)

Question B year 1- (operating cash flow?)

Question B year 2-(operating cash flow?)

Question B year 3-(operating cash flow?)

Question C year 1 - (operating cash flow?)

Question C year 2 - (operating cash flow?)

Question C year 3 - (operating cash flow?)