Four options of a carousel system are considered for a 300-bed general hospital. The planning department estimates savings derived from increased efficiency of warehouse personnel, thus as well as the reduction in the time spent on medication by the nursing staff. In the same way the supplier reports constant annual costs, both estimates are reported in the attached table. The systems carousel generally has a useful life of at least 15 years, however top management considers a 7-year study period. Determine the best alternative for the company, based on the Internal Rate of Performance (Incremental Analysis) with a MARR equal to 10%.

                                                               B1                   B2                      B3                     B4____
Initial investment                         $150,000         $330,000          $290,000          $300,000
Annual income                             $114,000         $147,000          $130,000          $120,000
Annual costs                                  $ 70,000         $  79,000          $  64,000           $ 71,000
Surrender value (@ t=7 years)    $34,000          $  66,000          $  60,000           $ 52,000

Answer rating: 100% (QA)

We will select the option that provides us the highest ... View the full answer