You are evaluating a proposed internal technology upgrade at a mid-sized wealth management business. The finance team wants to replace a legacy advisor workstation workflow with a new platform integration, and your VP asks whether the project creates value on an NPV basis. Assume cash flows occur at year-end, taxes are ignored for simplicity, and the business uses a 10% discount rate for projects of this risk profile.
| Metric | Amount |
|---|---|
| Initial implementation cost (Year 0) | $2,400,000 |
| Annual labor savings (Years 1-4) | $900,000 |
| Annual maintenance cost (Years 1-4) | $150,000 |
| Incremental annual revenue uplift (Years 1-4) | $250,000 |
| Terminal value / salvage value (Year 4) | $300,000 |
| Discount rate | 10.0% |
How would you calculate the project's net present value, and based on that result would you recommend approving the investment? Explain what NPV means in this decision and how your conclusion changes if the discount rate or annual savings are less favorable.