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What is the maximum amount that is justified for purchase

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Question

A drug store is looking into the possibility of installing a "24/7" automated prescription refill system to increase its projected revenues by $21,000 per year over the next five years. Annual expenses to maintain the system are expected to be $8,000. The system will have no market value at the end of its five-year life, and it will be depreciated by the SL method. The store's effective income tax rate is 40%, and the after-tax MARR is 12% per year. What is the maximum amount that is justified for the purchase of this prescription refill system?

Reference no: EM132379461

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