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Johnnys Lunches is considering purchasing a new, energy-efficient grill. The grill will cost $44,000 and will be depreciated straight-line over 3 years. It will be
Johnnys Lunches is considering purchasing a new, energy-efficient grill. The grill will cost $44,000 and will be depreciated straight-line over 3 years. It will be sold for scrap metal after 5 years for $11,000. The grill will have no effect on revenues but will save Johnnys $22,000 in energy expenses per year. The tax rate is 30%.
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 11%, calculate the net present value of the cash flow stream
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