TABLE OF CONTENTS Table 11-24 details the cost structure with leasing Class 4 and softswitch for 4,032 DS0s. The benefits and costs when leasing Class 4 and softswitch for 4,032 DS0s are shown in Table 11-25.
| Component of cost | Class 4 DMS-250 | Softswitch Convergent Networks ISC2000 |
|---|---|---|
| Collocation rent (annual) | $48,000 | $12,000 |
| Labor | $85,000 (engineer) | $70,000 (technician) |
| Maintenance contract | $108,500 | $22,500 |
| Leasing | $75,950 | $15,750 |
| IP circuits | $1,080,000 | $1,080,000 |
| Total | $1,397,450 | $1,200,250 |
| For life (j) of 2 years | $2,794,900 | $2,400,500 |
| Income tax component | Class 4 | Softswitch |
|---|---|---|
| Gross income | $29,494,886 | $29,494,886 |
| Business expenses | ($2,794,900) | ($2,400,500) |
| Taxable income before depreciation and/or capital gains | $26,699,986 | $27,094,386 |
| Income tax | $26,699,986(.35) = $9,344,995 | $27,094,386(.35) = $9,483,035 |
| Profit after taxes and expenses | $17,354,991 | $17,611,351 |
Table 11-26 compares net present values for Class 4 and softswitch when leasing 4,032 DS0s. Softswitch holds a slight (approximately 2 percent) edge over Class 4.
| Class 4 NPV with OCC at 12%, 10% and 7% | Softswitch NPV with OCCat 12%, 10% and 7% |
|---|---|
| NPV = ($17,354,991)(1.6901) = $29,331,670 | NPV = ($17,611,351)(1.6901) = $29,764,944 |
| NPV = ($17,354,991)(1.7355) = $30,119,586 | NPV = ($17,611,351)(1.7355) = $30,564,499 |
| NPV = ($17,354,991)(1.8080) = $31,377,823 | NPV = ($17,611,351)(1.8080) = $31,841,322 |
