Hilltop pharmacy is considering the purchase of an, Ask an Expert

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Hilltop pharmacy is considering the purchase of an automated pill machine that fills prescriptions. The machine costs $550,000 and will last five years before becoming obsolete. The system will be depreciated using a three-year MACRS schedule and will be worth $100,000 at the end of five years.

The machine will allow Hilltop to reduce staffing and save $250,000 annually. The machine requires higher levels of inventory. Therefore, the project will require an additional $15,000 in working capital at the beginning of the project and an additional $4,000 in each subsequent year. All NWC investments will be recovered in the last year.

Hilltop has a 25 percent tax rate and expects an 8 percent return from its projects.

What is the project NPV?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92849363

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