ohnny's Lunches is considering purchasing a new, energy-efficient grill. The grill will cost $45,000 and will bedepreciated straight-line over 3 years. It will be sold for scrap metal after 5 years for $11,250. The grill will have no effect on revenues but will save Johnny's $22,500 in energy expenses. The tax rate is 30%.

Required:

a. What are the operating cash flows in each year? 1 2 and 3 year b. What are the total cash flows in each year? 0,1,2,and 3 year c. Assuming the discount rate is 10%, calculate the net present value (NPV) of the cash flow stream. Should the grill be purchased?