1. A hospital is evaluating the cost-effectiveness of outsourcing its laundry services. The current in-house operation costs the hospital $500,000 annually. An external vendor has offered to do the job for $450,000 per year with a 5% increase annually. If the hospital expects a 2% annual increase in their in-house operation costs, after how many years will outsourcing become more expensive than the in-house operation? - A) 5 years - B) 10 years - C) 15 years - D) 20 years Answer: B) 10 years Rationale: This question tests the student's ability to apply compound interest formulas to project future costs and make a financially sound decision. 2. When preparing the budget for a new health clinic, which of the following would be classified as a capital expenditure? - A) Monthly utility bills - B) Purchase of an MRI