Johnny’s Lunches is considering purchasing a new, energy-efficient grill. The grill will cost $49,000 and will be depreciated straight-line over 3 years. It will be sold for scrap metal after 5 years for $12,250. The grill will have no effect on revenues but will save Johnny’s $24,500 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?

Q: Mike is considering adding a deli to his general store. The remodeling expenses and shelving costs…

A: Payback period It is a time the project will need for recovering the investment cost.

Q: 1) Lincoln Industries intends to move to a bigger premise in 7 years’ time. With the increased space…

A: As per our guidelines we are supposed to answer only one question (if there are multiple questions…

Q: Hayes, Inc. is considering buying a large piece of equipment for $80,000. Hayes expects that the…

A: It is the cash flow generated by the operations held for the business and its working.

Q: Johnny's lunches are considering purchasing a new energy-efficient grill. The grill will cost $49000…

A: NPV  Its usage is done for project’s profitability analysis in investment planning and in capital…

Q: High Roller Properties is considering building a new casino at an after-tax cost of $9.5 million at…

A: Real options technique, used in investment assessment methodologies, enhances conventional net…

Q: Bill plans to open a do-it-yourself dog bathing center in a storefront. The bathing equipment will…

A: concept. Profitability Index (PI). Profitability Index = present value of cash inflowspresent value…

Q: You are the owner of a small hardware store, and you are considering opening a gardening store in a…

A: To calculate the Net Present Value (NPV) of opening the bakery, we need to discount the cash flows…

Q: The owner of a bicycle repair shop forecasts revenues of $228,000 a year. Variable costs will be…

A: Income Statement: A financial statement that shows the profitability of the business in the given…

Q: Johnny's Lunches is considering purchasing a new, energy-efficient grill. The grill will cost…

A: NPV is also known as Net Present value. It is a capital budgeting technique which helps in decision…

Q: Required: a. What are the operating cash flows in each year? b. What are the total cash flows in…

A: Calculation of operating cash flow and total cash flows 1 to 5 years Particulars Year 1 Year 2…

Q: Johnny’s Lunches is considering purchasing a new, energy-efficient grill. The grill will cost…

A: Operating cash flow :- Operating cash flow (OCF) is a proportion of the measure of money produced by…

Q: (Ignore income taxes in this problem.) Your Company has a truck that needs a new engine that would…

A: Given Discount rate = 6% New engine = 35000 Life = 5 years Annual operating expenses = 8500 Salvage…

Q: You are considering buying a new tractor that costs $275,000 that is expected to last five years.…

A:

Q: y’s Lunches is considering purchasing a new, energy-efficient grill. The grill will cost $43,000 and…

A: Cash flows are very important in the selection of equipments and the capital budgeting and financial…

Q: Gator Bicycles just bought a new brake calibration machine that is expected to generate $36,000 in…

A: Operating cash flow is that amount which is earned by the investor from his investment. It includes…

Q: You are purchasing an equipment for $ 200,000 for your new store. Assume the store has no other…

A: Net Cash Flow: Net cash flow is the difference between a cash inflow and cash outflow of a Company…

Q: Bill plans to open a do-it-yourself dog bathing center in a storefront. The bathing equipment will…

A: The initial cost of the project is $160,000.The annual after-tax cash flow is $40,000.The project…

Q: atur Bicydes just bought a new brake calibration machine that is expected to generate $24,000 in new…

A: Variables in the question:New revenue each of the next 4 years=$24000No increase in cash operating…

Q: Ayayai's Lawn Service needs to purchase a new lawnmower costing $8,476 to replace an old lawnmower…

A:

Q: You own a restaurant and are considering buying a liquor license. You estimate that it will cost you…

A: NPV is computed below: The formula sheet used for computing the above table as follows: Hence the…

Q: The owner of a bicycle repair shop forecasts revenues of $168,000 a year. Variable costs will be…

A: The income statement is one of the financial statements that record the company’s income, expenses,…

Q: Margaret's Bakery is considering a replacement of their baked goods display cases. The current cases…

A: After tax cashflow = Sell Price - Tax paid on capital gain + tax saved on capital loss

Q: Installing a solar panel system on your roof comes with a total upfront cost of $18,000 after all…

A:

Q: The owner of a pizza restaurant needs to buy a new pizza oven for the restaurant. The oven costs…

A: 1. Depreciation Expense:The oven has a cost of $450 and a useful life of 5 years.We're using the…

Q: Johnny’s Lunches is considering purchasing a new, energy-efficient grill. The grill will cost…

A: NPV is also known as Net Present Value.. It is a capital budgeting technique which helps in decision…

Q: Grill Master Johnnys is thinking about purchasing a new, energy-efficient grill. The grill will cost…

A: Free cash flow is that amount which is earned by the investor from the project. It is the net amount…

Q: Anthony operates a part time auto repair service. He estimates that a new diagnostic computer system…

A: Lets understand the basics.Maximum payment that can be generally make for purchase of asset would be…

Q: The owner of a bicycle repair shop forecasts revenues of $240,000 a year. Variable costs will be…

A: INCOME STATEMENTIncome Statement is one of the Important Financial Statement of the Company. Income…

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.