A major transportation company is considering the installation of new software for its fleet of delivery trucks. The software will provide navigation of driving routes taking into consideration the location of their deliveries and traffic to ensure the quickest route avoiding accidents and roadworks. The software also has artificial intelligence to detect if the driver is tired and reminds the driver to take regular rest times. All data in each vehicle is recorded in real time and available for management to monitor.

The initial outlay would represent $500,000 for the software and a further $200,000 for hardware. In the first year installation costs of $50,000 would be required and a further $20,000 to provide training to the drivers.

Annual subscription and maintenance costs of $25,000 will be required to be paid to the vendor.

It is expected the new software will result in annual saving of $195,000 in fuel and labour savings for the expected life of the software of five (5) years.

Assume a discount rate of 5% and all cashflows occur at the end of each year. Ignore any tax and implications.

Required

Calculate the Net Present Value (NPV) and provide a recommendation to management as to whether the project should proceed. Note you should include a discussion of other non-financial factors that should be considered as part of the decision-making process.

Description	Year 0	Year 1	Year 2	Year 3	Year 4	Year 5	Total