5. The summer intern Tim hired last year provided an estimate on the inventory holding rate, which included the cost of capital at 9.5 percent and the cost of storage and handling at 7 percent. The hurdle rate used for capital expenditures is set at 30 percent by head office. Which one would you use for the inventory holding rate, 9.5+ 7%, 30%, or 30 + 7%? Why? 6. What potential problems could arise by eliminating the Atlanta warehouse? 7. Assuming that the inventory holding cost is based on an annual rate of 16.5%, fill out the following table. Cost Category Retain Atlanta | Close Atlanta 1. Transportation Charlotte to Atlanta: 8/month x $725/load /month Columbia to Atlanta: 4/month x $625/load /month Total /month Charlotte to Atlanta: 20/month x $725/load month Columbia to Charlotte: 4/month x $260/load /month Total month 2. Warehousing Atlanta warehouse: $5,250 + $6,500 /month Cross-Docking month Sub-total month /month /year year 3. Incremental Inventory Carrying Costs $160,000 x 16.5% year Total Costs year year Differential (per year) year