1.) A firm is considering replacing the existing industrial air conditioning unit. They will pick one of two units. The first, the AC360, costs $26,483.00 to install, $5,165.00 to operate per year for 7 years at which time it will be sold for $7,128.00. The second, RayCool 8, costs $41,603.00 to install, $2,064.00 to operate per year for 5 years at which time it will be sold for $9,049.00. The firms cost of capital is 5.53%. What is the equivalent annual cost of the AC360? Assume that there are no taxes.

2.) A firm is considering replacing the existing industrial air conditioning unit. They will pick one of two units. The first, the AC360, costs $26,850.00 to install, $5,069.00 to operate per year for 7 years at which time it will be sold for $6,829.00. The second, RayCool 8, costs $41,251.00 to install, $2,032.00 to operate per year for 5 years at which time it will be sold for $8,903.00. The firms cost of capital is 6.42%. What is the equivalent annual cost of the RayCool8? Assume that there are no taxes.