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A food distributor is considering purchasing a software program to more efficiently route its fleet of 15 delivery vehicles. The initial cost of the software
A food distributor is considering purchasing a software program to more efficiently route its fleet of 15 delivery vehicles. The initial cost of the software is $90,000 and will be amortized (depreciated) by the straight-line method over five years with no salvage value. In addition, the software company requires a $10,000 per year maintenance contract. The software is expected to reduce the total delivery miles driven by 20,000 miles annually. The distributor estimates that the operating costs for its delivery trucks are $2.00 per mile for fuel, oil, repairs and tires. The distributors tax rate is 21%. What is the after-tax Net Present Value of this potential investment, and would you
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