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 1 month ago

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