Response to the following problem:
Sun Gas Corporation wants to move its sales-order system to the Web. Under the proposed system, gas stations and other merchants will use a Web browser and, after typing in a password for the Sun Gas Web page, will be able to check the availability and current price of various products and place an order. Currently, customer service representatives take dealer's orders over the phone; they record the information on a paper form, then manually enter it into the firm's computer system.
CFO Carrie Smith believes that dealers will not adopt the new Web system unless Sun Gas provides financial assistance to help them purchase or upgrade their PCs. Smith estimates this one-time cost at $750,000. Sun Gas will also have to invest $150,000 in upgrading its own computer hardware. The cost of the software and the consulting fee for installing the system will be $230,000. The Web system will enable Sun Gas to eliminate 25 clerical positions. Smith estimates that the benefits of the new system's lower labor costs will have a present value of $1,357,000.
Required:
Use a cost-benefit analysis to recommend to Carrie Smith whether Sun Gas should proceed with the Web-based ordering system. Give your reasons, showing supporting calculations.