if the new software costs 70 000 and is expected to be useful for three years should 609019

King Enterprises is a research analysis firm for television advertisements. On January 1, 2013, management is considering updating its computer system with new software that is estimated to cut labor costs by 10 percent. King”s labor costs for the current year are estimated to be $400,000 and would be expected to remain the same the following two years. In addition, the new software has a filing system that will allow for a decrease in the storage of the hardcopy of documents within the facilities by 30 percent. The space opened up from the storage of documents will be used to decrease rent expense by $1,000 per month. If the new software costs $70,000 and is expected to be useful for three years, should King Enterprises purchase it?

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