Question
You are the Director of Pharmacy at Memorial Hospital and have just returned from the hospitals strategic planning retreat where you learned that oncology is
You are the Director of Pharmacy at Memorial Hospital and have just returned from the hospitals strategic planning retreat where you learned that oncology is a focused growth area for the coming years. At a recent industry conference you saw a demonstration of a new robotic technology that provides more efficient and accurate preparation of chemotherapy solutions. You believe that implementing this technology will provide the support your pharmacists need as oncology volumes increase. However, you are also aware that capital expenditures are being closely reviewed. You decide to complete a 5 year ROI analysis and present your findings to hospital senior management. The robot itself costs $1,350,000, it will cost $500,000 to re-configure the existing pharmacy space and $135,000 in personnel training. Once the robot is put into service, Memorial Hospital will be required to purchase a 5-year service/maintenance agreement costing a fixed $160,000 per year and one full-time technician will need to be dedicated to support the system. The average annual salary and fringe of a technician is $50,000. It is anticipated the robot will improve existing workflows each year by: eliminating preparation errors, reducing the purchase of outsourced medication by $500,000, reducing the amount of waste by $250,000 and overall will improve lab employee safety and satisfaction. The weighted average cost of capital is 10%. b) What are the project's cash inflows?
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