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Please help with the two blanks did not get correct Johnny's Lunches is considering purchasing a new, energy-efficient grill. The grill will cost $40,000 and
Please help with the two blanks did not get correct
Johnny's Lunches is considering purchasing a new, energy-efficient grill. The grill will cost $40,000 and will be depreciated straightline over 3 years. It will be sold for scrap metal after 5 years for $10,000. The grill will have no effect on revenues but will save Johnny's $20,000 in energy expenses. The tax rate is 30%. Required: 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 12%, calculate the net present value (NPV) of the cash flow stream. Should the grill be purchased? What are the operating cash flows in each year? Note: Do not round intermediate calculations. What are the total cash flows in each year? Note: Negative amounts should be indicated with a minus sign. Do not round intermediate calculations. Assuming the discount rate is 12%, calculate the net present value (NPV) of the cash flow stream. Should the grill be purchased? Note: Do not round intermediate calculations. Round your answer to 2 decimal placesStep by Step Solution
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