A business process outsourcing has the following avoided costs, incurred costs, and other characteristics:

• Costs avoided by outsourcing:
  • Salaries, wages, and benefits = $450,000 a year
  • Furniture and equipment = $100,000 a year
  • Supplies = $150,000 a year
  • Software = $10,000 a year
  • Facility rent/lease = $75,000 a year
  • Utilities and communications = $20,000 a year
  • Transition revenue now
    • Sale of unused assets = $10,000
• Costs incurred by outsourcing:
  • Payments to supplier = $440,000 a year
  • Contract administration = $30,000 a year
  • Transition cost now
    • Severance pay = $40,000
• 4-year time horizon
• Discount rate = 4% per year
• Assume all cash flows occur at the beginning of each year
• Assume now is the beginning of Year 1.

Use Excel to answer the following question. Based on the NPV of the cash flows, should this business process be outsourced?

Please show all the formulas used in excel.