Chrysler is considering a cost reduction program. The suppliers must reduce the cost of the components that they furnish to Chrysler by 6?% each year.?(The total amount of savings would increase each?year.) The initial?costs:

? Program?Setup: ?$13,500,000

? Feasibility Study?(completed six months?ago):1,800,000

? Supplier?Training:6,500,000

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 ?$90,000,000 per?year.) The program has been designed as a?five-year initiative, and?Chrysler's MARR for such projects is 15?% ?(im?). There will be annual operating expenses associated with the program for further training of?vendors, updating internal?documentation, 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.

Chrysler is considering a cost reduction program. The suppliers must reduce the cost of the components that they furnish to Chrysler by 6% each year. (The total amount of savings would increase each year.) The initial costs: Program Setup: $13,500,000 . Feasibility Study (completed six months ago): 1,800,000 . Supplier Training: 6,500,000 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 $90,000,000 per year.) The program has been designed as a five-year initiative, and Chrysler's MARR for such projects is 15% (,). There will be annual operating expenses associated with the program for further training of vendors, updating internal documentation, 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. Click the icon to view the interest and annuity table for discrete compounding when i = 15% per year. The PW if the program is approved is $ million. (Round to one decimal place.) The PW if the program is not approved is $ | million. (Round to one decimal place.) The maximum annual operating expense for this program is $ | million. (Round to two decimal places.)More Info X Discrete Compounding; i =15% Single Payment Uniform Series Compound Compound Sinking Capital Amount Present Amount Present Fund Recovery Factor Worth Factor Factor Worth Factor Factor Factor To Find F To Find P To Find F To Find P To Find A To Find A Given P Given F Given A Given A Given F Given P N F/P P/F F/A P/A A/F A/P 1.1500 0.8696 1.0000 0.8696 1.0000 1.1500 1.3225 0.7561 2.1500 1.6257 0.4651 0.6151 1.5209 0.6575 3.4725 2.2832 0.2880 0.4380 1.7490 0.5718 4.9934 2.8550 0.2003 0.3503 2.0114 0.4972 6.7424 3.3522 0.1483 0.2983 2.3131 0.4323 8.7537 3.7845 0.1142 0.2642 2.6600 0.3759 11.0668 4.1604 0.0904 0.2404 3.0590 0.3269 13.7268 4.4873 0.0729 0.2229 3.5179 0.2843 16.7858 4.7716 0.0596 0.2096 4.0456 0.2472 20.3037 5.0188 0.0493 0.1993 11 4.6524 0.2149 24.3493 5.2337 0.0411 0. 1911 12 5.3503 0.1869 29.0017 5.4206 0.0345 0.1845 13 6.1528 0.1625 34.3519 5.5831 0.0291 0. 1791 14 7.0757 0.1413 40.5047 5.7245 0.0247 0.1747 15 8.1371 0.1229 47.5804 5.8474 0.0210 0.1710 16 9.3576 0.1069 55.7175 5.9542 0.0179 0.1679 17 10.7613 0.0929 65.0751 6.0472 0.0154 0.1654 18 12.3755 0.0808 75.8364 6.1280 0.0132 0.1632 19 14.2318 0.0703 88.2118 6.1982 0.0113 0.1613 20 16.3665 0.0611 102.4436 6.2593 0.0098 0. 1598 Print Done