Fulton National Hospital is reviewing ways of cutting the cost of stocking medical supplies. Two new systems

Question:

Fulton National Hospital is reviewing ways of cutting the cost of stocking medical supplies. Two new systems are being considered to lower the hospital's holding and handling costs. The hospital's industrial engineer has compiled the relevant financial data for each system as given in Table P7.47 (dollar values are in millions).
The system life of eight years represents the period that the contract with the medical suppliers is in force. If the hospital's is 10%, which system is the most economical?
TABLE P7.47

MARR
Minimum Acceptable Rate of Return (MARR), or hurdle rate is the minimum rate of return on a project a manager or company is willing to accept before starting a project, given its risk and the opportunity cost of forgoing other...