1. Construct a table showing the first-year costs, annual costs, and the annual benefits for the following investment proposal:

Costs:

• Initial investment (software, hardware, implementation) $180,000, incurred in year zero.
• Software maintenance (starting in year two) $30,000 per year, increasing at a rate of 3% per year thereafter

Benefits:

• Labor savings $140,000 per year, starting in year two
• Equipment savings $55,000, year one only.
• Increased clinic revenue, $50,000 per year, starting in year one.
• All yearly savings increase at the rate of inflation, assumed to be 3% per year.

Calculate the Net Present Value of this proposed investment at the end of the five-year planning cycle using a discount rate of 5%. Show your work. Assume that one-time costs are incurred in year zero, and annual costs and savings are incurred in years 1 through 5.