Chrysler is considering a cost reduction program. The suppliers must reduce the cost of the components that they furnish to Chrysler by

44% each year. (The total amount of savings would increase each year.) The initial costs:

Program Setup:	11,500,000
Feasibility Study (completed six months ago):	1,800,000
Supplier Training:	7,500,000

Chrysler is currently paying a total of $90,000,000 per year for components purchased from the vendors who will be involved in this program. (Assume that, if the program is not approved, the annual cost of purchased components will remain constant at $90,000,000per year.) The program has been designed as a five-year initiative, and Chrysler's MARR for such projects is 12%(im).

There will be annual operating expenses associated with the program for further training of vendors, updating internaldocumentation, and so on. Given the projected savings in purchased components, what would be the maximum annual operating expense for this program such that it is marginally justified? Assume that the EOY 1 cost for purchased components is $90,000,000.

A. The Present Worth (PW) if the program is approved is?

B. The Present Worth (PW) if the program is not approved is?

C. The maximum annual operating expense for this program is?