TIES IN HEALTH INFORMATION MANAGEMENT CASE 6-23 Net Present Value (NPV) Method of Evaluating a Capital Expense You are regur requesting approval of a capital expenditure for dirtation system. The cost of the system 365,000.00. You expect that the syste the system will save the HIM department $20,000.00 per year by eliminating the cost of outside contract transcription on. You anticipate that the system life will be five years. Your facility uses straight line depreciation for the life of a of any capital expenditure. Assume that management requires the use of an NPV of capital at 10%. Use the NPV she for your use. 1. Calculate the net cash flow. 2. Would the dictation system meet the criteria to have a 10% return and exceed the initial capital outlay? TABLE 6-27 NPV at 10% Years Net Cash Flow Present Value of Cash Flow NPV at 10% Factor for NPV at 10% $0.909091 $0.826446 $0.751315 $0.683013 $0.620921