Four options of a carousel system are considered by a $300-$bed general hospital. The Department of

planning estimates the net cash flows of each option, in the attached table, derived from the increase in efficiency of the

warehouse staff, as well as the reduction in medication time spent by nursing staff. The

Carousel systems generally have a useful life of at least $15$ years, however, senior management considers a period

of $7-$year study to evaluate projects of this nature. Determine the best alternative for the

company, based on the Equivalent Annual Value, if the MARR declared by the company is equal to $12\mathrm{.}5\%$effective annual value.

B$1$ B$2$ B$3$ B$4$

Initial investment $195,000315,000300,000260,000$

Annual net cash flow $44,00068,00066,00049,000$

Surrender values $$per year $734,00060,00060,00052,000$