a. What are the operating cash flows in years 1 to 3? (Do not round intermediate calculations. Round your answers to the nearest whole dollar.) Amount The operating cash flow in year 2018 The operating cash flow in year 2019 The operating cash flow in year 2020 b. What are total cash flows in years 1 to 3? (Do not round intermediate calculations. Round your answers to the nearest whole dollar. Enter negative values with a minus sign.) Amour The total cash flow in year 2018 The total cash flow in year 2019 The total cash flow in year 2020 c. If the discount rate is 10%, should the grill be purchased?

Intermediate Financial Management (MindTap Course List)
13th Edition
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Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter12: Capital Budgeting: Decision Criteria
Section: Chapter Questions
Problem 22P: The Scampini Supplies Company recently purchased a new delivery truck. The new truck cost $22,500,...
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Assume it is January 2018 and Johnny's Lunches is considering purchasing a new, energy-efficient grill. The grill will cost $20,400 and
will be depreciated in an asset class that carries a CCA rate of 30%. It will be sold for scrap metal after 3 years for $5,500. The grill will
have no effect on revenues but will save Johnny's $8,200 in energy expenses. The firm has other assets in this asset class. The tax
rate is 35%. Assume the discount rate is 10%.
a. What are the operating cash flows in years 1 to 3? (Do not round intermediate calculations. Round your answers to the nearest
whole dollar.)
Amount
The operating cash flow in year 2018
The operating cash flow in year 2019
The operating cash flow in year 2020
b. What are total cash flows in years 1 to 3? (Do not round intermediate calculations. Round your answers to the nearest whole
dollar. Enter negative values with a minus sign.)
Amour
The total cash flow in year 2018
2$
The total cash flow in year 2019
$
The total cash flow in year 2020
$
c. If the discount rate is 10%, should the grill be purchased?
If the discount rate is 10%, the grill
Transcribed Image Text:Assume it is January 2018 and Johnny's Lunches is considering purchasing a new, energy-efficient grill. The grill will cost $20,400 and will be depreciated in an asset class that carries a CCA rate of 30%. It will be sold for scrap metal after 3 years for $5,500. The grill will have no effect on revenues but will save Johnny's $8,200 in energy expenses. The firm has other assets in this asset class. The tax rate is 35%. Assume the discount rate is 10%. a. What are the operating cash flows in years 1 to 3? (Do not round intermediate calculations. Round your answers to the nearest whole dollar.) Amount The operating cash flow in year 2018 The operating cash flow in year 2019 The operating cash flow in year 2020 b. What are total cash flows in years 1 to 3? (Do not round intermediate calculations. Round your answers to the nearest whole dollar. Enter negative values with a minus sign.) Amour The total cash flow in year 2018 2$ The total cash flow in year 2019 $ The total cash flow in year 2020 $ c. If the discount rate is 10%, should the grill be purchased? If the discount rate is 10%, the grill
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