SPM Problem(a) Annual Sales $ 7,900,000(b) Cost of goods sold 55%(c) Inventory Carrying Cost 30%(d) Total Expenses $ 2,500,000Fixed 25%Variable 75%Inventory $ 400,000(e) A/C Recievable $ 100,000(f) Other Current Assets $ 400,000(g) Fixed Assets $ 6,500,000(h) Tax Rate 40%Prepare a Base Case scenario using the above data.Following changes will occur as a result of implementation of new software(i) Inventories will be reduced by $ 340,000(ii) Transportation costs will be reduced by $ 560,000(iii) Warehousing costs will be reduced by $ 105,000(iv) Cost of new information system $ 170,000(v) Operating expenses for new system $ 400,000(vi) Depreciation (straight line over) 10 yearsYou are considering installing and implementing a new logistics information system that would allowyou to track orders and manage inventories more effectively at DiskCo. The company’s existingcomputer hardware configuration will need minor modifications, and new software will be requiredfor this new information system. In preparing to present your ideas at the next managementmeeting, you know that it will be quite tough to convince the other managers (especially the financialcomptroller) that this new system will benefit the company. So, you do some thorough research andaccumulate the data below.