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Johnnys Lunches is considering purchasing a new, energy-efficient grill. The grill will cost $30,000 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 $30,000 and will be depreciated straight-line over 3 years. It will be sold for scrap metal after 5 years for $7,500. The grill will have no effect on revenues but will save Johnnys $15,000 in energy expenses. The tax rate is 30%. A) What are the operating cash flows in years 1, 2, 3, 4, 5? B) What are the total cash flows in years 1, 2, 3, 4, 5? C)Assuming the discount rate is 10%, calculate the net present value (NPV) of the cash flow stream. Should the grill be purchased?

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