Assume it is January 2018 and Johnny's Lunches is considering purchasing a new, energy-efficient grill. The grill will c
Posted: Sat Feb 26, 2022 9:06 am
Assume it is January 2018 and Johnny's Lunches is considering
purchasing a new, energy-efficient grill. The grill will cost
$19,200 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
$5,600. The grill will have no effect on revenues but will save
Johnny's $10,200 in energy expenses. The firm has other assets in
this asset class. The tax rate is 35%. Assume the discount rate is
6%.
What are the operating cash flows in
years 1 to 3?
What are total cash flows in years 1 to 3?If the discount rate
is 6%, should the grill be purchased?
purchasing a new, energy-efficient grill. The grill will cost
$19,200 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
$5,600. The grill will have no effect on revenues but will save
Johnny's $10,200 in energy expenses. The firm has other assets in
this asset class. The tax rate is 35%. Assume the discount rate is
6%.
What are the operating cash flows in
years 1 to 3?
What are total cash flows in years 1 to 3?If the discount rate
is 6%, should the grill be purchased?