Johnny's Lunches is considering purchasing a new, energy-efficient grill. The grill will cost $43,000 and will be depreciated straight- ine over 3 years. It will be sold for scrap metal after 5 years for $10,750. The grill will have no effect on revenues but will save Johnny $21,500 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? Complete this question by entering your answers in the tabs below. Required A Required B Required C What are the operating cash flows in each year? (Do not round intermediate calculations. Round your answers to 2 decimal places.) Year Operating Cash

Johnny's Lunches is considering purchasing a new, energy-efficient grill. The grill will cost $43,000 and will be depreciated straight- ine over 3 years. It will be sold for scrap metal after 5 years for $10,750. The grill will have no effect on revenues but will save Johnny $21,500 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? Complete this question by entering your answers in the tabs below. Required A Required B Required C What are the operating cash flows in each year? (Do not round intermediate calculations. Round your answers to 2 decimal places.) Year Operating Cash

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter19: Capital Investment

Section: Chapter Questions

Problem 9E: Each of the following scenarios is independent. All cash flows are after-tax cash flows. Required:...

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Johnny’s Lunches is considering purchasing a new, energy-efficient grill. The grill will cost $47,000 and will be depreciated straight-line over 3 years. It will be sold for scrap metal after 5 years for $11,750. The grill will have no effect on revenues but will save Johnny’s $23,500 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 11%, calculate the net present value (NPV) of the cash flow stream. Should the grill be purchased?
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Johnny’s Lunches is considering purchasing a new, energy-efficient grill. The grill will cost $46,000 and will be depreciated straight-line over 3 years. It will be sold for scrap metal after 5 years for $11,500. The grill will have no effect on revenues but will save Johnny’s $23,000 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? Assuming the discount rate is 12%, calculate the net present value (NPV) of the cash flow stream. Should the grill be purchased? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
Johnny's Lunches is considering purchasing a new, energy-efficient grill. The grill will cost $43,000 and will be depreciated straight- line over 3 years. It will be sold for scrap metal after 5 years for $10,750. The grill will have no effect on revenues but will save Johnny's $21,500 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? Complete this question by entering your answers in the tabs below. Required A Required B Required C What are the operating cash flows in each year? Note: Do not round intermediate calculations. Round your answers to 2 decimal places. Year 0 1 2 3 4 5 Operating Cash Flows
Johnny’s Lunches is considering purchasing a new, energy-efficient grill. The grill will cost $45,000 and will be depreciated 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?b. What are the total cash flows in each year?c. Assuming the discount rate is 10%, calculate the net present value (NPV) of the cash flow stream. Should the grill be purchased? Req A What are th operating cash flows in each year? 1. 2. 3. Req B What are the total cash flows in each year? 0. 1. 2. 3. Req 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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