Grill Master Johnnys is thinking about purchasing a new, energy-efficient grill. The grill will cost $53,000.00 and will be depreciated according to the 3-year MACRS schedule. It will be sold for scrap metal after 3 years for $11,750.00. The grill will have no effect on revenues but will save Johnny’s $23,500.00 per year in energy expenses. The tax rate is 40%. The 3-year MACRS schedule;
Year | Depr % |
1 |
33.33 |
2 | 44.45 |
3 | 14.81 |
4 | 7.41 |
What is the total cash flow in year 3?
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