Mountain County Hospital is considering purchasing a new automated drug dispensing maching for their inpatient pharmacy.

The purchase price of the dispensing machine is $600,000 but will require $60,000 in construction costs to accommodate the machine and $40,000 for set up and installation.

• The dispensing machine has a useful life of 7 years and has no salvage value. Mountain County's policy to to include construction and transport costs in with the purchase price for determining the cost of an asset when calculating depreciation.
• By purchasing this automated dispensing machine Mountain County Hospital will be able to eliminate 2 pharmacy technologist positions and save $120,000 per year in labor costs.
• Supplies for the automated dispensing machine will cost $10,000 per year.
• The automated dispensing machine will increase medication dispensing accuracy and increase quality of care by reducing medication errors.

a) Assume Mountain County Hospital is a not-for profit hospital. Map the cash flows from the project over time

b) Would you buy the dispensing machine?

c) Now assume that Mountain County Hospital is a For Profit hospital. Map the cash flows assuming that Mountain County is in the 25% tax bracket and use straight line depreciation.