• Company: Meadow Pharmacy
• Current Equipment: Operable for 3 more years with zero resale value.
• New Equipment Cost: $350,000
• Additional Working Capital: $60,000
• Annual Cash Inflows: $100,000 in the first year, increasing by $20,000 each subsequent year.
• Salvage Value: $40,000 at the end of the 5th year.
• Required Rate of Return: 10%
• Setup Cost: $12,000 in the first year.

Requirements:

1. Calculate the NPV of the investment.
2. Determine if the investment is advisable.
3. Consider the salvage value of the new equipment.
4. Include additional working capital and setup costs.
5. Use a discount rate of 10%.