Johnnys Lunches is considering purchasing a new, energy-efficient grill. The grill will cost $33,000 and...
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Accounting
Johnnys Lunches is considering purchasing a new, energy-efficient grill. The grill will cost $33,000 and will be depreciated according to the 3-year MACRS schedule. It will be sold for scrap metal after 3 years for $8,250. The grill will have no effect on revenues but will save Johnnys $16,500 in energy expenses per year. The tax rate is 30%. Use the MACRS depreciation schedule.
a.
What are the operating cash flows in each year? (Do not round intermediate calculations. Round your answers to 2 decimal places.)
Year
Operating Cash Flows
1
$
2
3
b.
What are the total cash flows in each year? (Negative amounts should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to 2 decimal places.)
Time
Total Cash Flows
0
$
1
2
3
c.
If the discount rate is 10%, should the grill be purchased?
Yes
No
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