Johnny's Lunches is considering purchasing a new, energy-efficient grill. The grill will cost $49,000 and will be depreciated according to the 3-year MACRS schedule. It will be sold for scrap metal after 3 years for $12,250. The grill will have no effect on revenues but will save Johnny's $24,500 in energy expenses per year. The tax rate is 30%.

Use theMACRS depreciation schedule.

a.What are the operating cash flows in each year?(Do not round intermediate calculations. Round your answers to 2 decimal places.)

b.What are the total cash flows in each year?(Do not round intermediate calculations. Round your answers to 2 decimal places.)

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.)

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