Question
Johnnys Lunches is considering purchasing a new, energy-efficient grill. The grill will cost $34,000 and will be depreciated according to the 3-year MACRS schedule. It
Johnnys Lunches is considering purchasing a new, energy-efficient grill. The grill will cost $34,000 and will be depreciated according to the 3-year MACRS schedule. It will be sold for scrap metal after 3 years for $8,500. The grill will have no effect on revenues but will save Johnnys $17,000 in energy expenses per year. The tax rate is 40%. Use the MACRS depreciation schedule.
a.What are the operating cash flows in each year? (Do not round intermediate calculations. Round your answers to 2 decimal places.)
YearOperating Cash Flows1$ 23
b.What are the total cash flows in each year? (Negative amounts should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to 2 decimal places.)
TimeTotal Cash Flows0$ 123
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