Question: new Computerized Maintenance Model System (CMMS) will cost $355,000. Migration costs over to this new system are estimated to be an additional $30,000. This cost

new Computerized Maintenance Model System (CMMS) will cost $355,000. Migration costs over to this new system are estimated to be an additional $30,000. This cost will be depreciated at 20 percent per year. The new system would save the hospital $125,000 per year before taxes in operating costs. At the end of 4 years, it is estimated it will cost $40,000 to either shut the system down or migrate again. The hospital is a non-profit and pays a tax rate of 0%. Assuming a discount rate (r) of 10%, what is the NPV of the purchase?

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