Fuzzy Restaurant is considering the purchase of a $1,500,000 flat top grill. The grill has an...

Fuzzy Restaurant is considering the purchase of a $1,500,000 flat top grill. The grill has an economic life of 8 years and will be fully depreciated using straight line method. The grill is expected to produce 59,000 tacos per year for the next 8 years, with each costing $1.50 to make and priced at $5. Assume the discount rate is 8% and the tax rate is 21%. The restaurant expects the market value of the grill to be $200,000, 8 years from now. Calculate the book value of the grill at the end of year 5. (Round to 2 decimals) Calculate the operating cash flow at the end of year 1. Calculate the net present value.

Expert Solution

Please refer to below spreadsheet for calculation and answer. Cell reference also provided.

Cell reference -

jeff jeffy answered 4 hours ago

Mad Taco is considering the purchase of a $1,500,000 flat top grill. The grill has an...

Mad Taco is considering the purchase of a $1,500,000 flat top grill. The grill has an economic life of 8 years and will be fully depreciated using straight line method. The grill is expected to produce 59,000 tacos per year for the next 8 years, with each costing $1.50 to make and priced at $5. Assume the discount rate is 8% and the tax rate is 21%. Mad Taco expects the market value of the grill to be $200,000, 8...

a. Expo Restaurant is considering the purchase of a $4,500,000 flat top grill. The grill has...

a. Expo Restaurant is considering the purchase of a $4,500,000 flat top grill. The grill has an economic life of 6 years and will be fully depreciated using the straight-line method. The grill is expected to produce 250,000 tacos per year for the next 6 years, with each costing $2 to make and priced at $6. Assume the discount rate is 7% and the tax rate is 21%. The restaurant expects the market value of the grill to be $600,000,...

Jack is considering to purchase a heavy duty grill for his restaurant. Estimated total investment is...

Jack is considering to purchase a heavy duty grill for his restaurant. Estimated total investment is $100,000, and below stream of net cash flow is expected for the next five years. If fair discount rate is 8%, what should be Jack’s decision? |------------|------------|------------|------------|------------| 0 1 2 3 4 5 -$100,000 $10,000 20,000 30,000 30,000 30,000 1. If fair discount rate is 8%, what should be Jack’s decision based on the Net Present Value? A. Purchase since NPV is greater than zero B. Do not purchase since NPV is less than...

A hospital is considering the purchase of a piece of medical equipment that costs $1,500,000 and...

A hospital is considering the purchase of a piece of medical equipment that costs $1,500,000 and has a useful life of five years and no salvage value at the end of its useful life. The equipment generates revenues of $650,000 per year and operating expenses of $300,000. Calculate NPV, payback, BCR, and IRR, should the equipment be purchased if the discount rate is 6% or 10%? Revenue Expense Year 0 - $1,500,000 (investment) ...

A tool and die company is considering the purchase of a drill press with fuzzy-logic software...

A tool and die company is considering the purchase of a drill press with fuzzy-logic software to improve accuracy and reduce tool wear. The company has the opportunity to buy a slightly used machine for $15,000 or new one for $21,000. Because the new machine is a more sophisticated model, its operating cost is expected to be $7000 per year, while the used machine is expected to require $8200 per year. Each machine is expected to have 25 years life...

Avignon Restaurant is considering the purchase of a $10,500 soufflé maker. The soufflé maker has an...

Avignon Restaurant is considering the purchase of a $10,500 soufflé maker. The soufflé maker has an economic life of four years and will be fully depreciated by the straight-line method. The machine will produce 2,250 soufflés per year, with each costing $2.70 to make and priced at $6.00. Assume that the discount rate is 15 percent and the tax rate is 25 percent. What is the NPV of the project? (Do not round intermediate calculations and round your answer to...

Creole Restaurant is considering the purchase of a $33,000 soufflé maker. The soufflé maker has an...

Creole Restaurant is considering the purchase of a $33,000 soufflé maker. The soufflé maker has an economic life of six years and will be fully depreciated by the straight-line method. The machine will produce 2,400 soufflés per year, with each costing $2 to make and priced at $7. Assume that the discount rate is 14 percent and the tax rate is 34 percent. Should the company make the purchase?

Raphael Restaurant is considering the purchase of a $9,800 soufflé maker. The soufflé maker has an...

Raphael Restaurant is considering the purchase of a $9,800 soufflé maker. The soufflé maker has an economic life of five years and will be fully depreciated by the straight-line method. The machine will produce 1,900 soufflés per year, with each costing $2.30 to make and priced at $5.30. Assume that the discount rate is 11 percent and the tax rate is 35 percent. What is the NPV of the project? (Do not round intermediate calculations and round your answer...

Paul Restaurant is considering the purchase of a $10,400 soufflé maker. The soufflé maker has an...

Paul Restaurant is considering the purchase of a $10,400 soufflé maker. The soufflé maker has an economic life of 7 years and will be fully depreciated by the straight-line method. The machine will produce 1,200 soufflés per year, with each costing $2.60 to make and priced at $4.95. The discount rate is 10 percent and the tax rate is 23 percent. What is the NPV of the project? (Do not round intermediate calculations and round your answer to 2...

Paul Restaurant is considering the purchase of a $10,900 soufflé maker. The soufflé maker has an...

Paul Restaurant is considering the purchase of a $10,900 soufflé maker. The soufflé maker has an economic life of 8 years and will be fully depreciated by the straight-line method. The machine will produce 1,200 soufflés per year, with each costing $2.60 to make and priced at $4.95. The discount rate is 10 percent and the tax rate is 23 percent. What is the NPV of the project? (Do not round intermediate calculations and round your answer to 2...

Question