Question
1. A firm is considering replacing the existing industrial air conditioning unit. They will pick one of two units. The first, the AC360, costs $26,345.00
The second, RayCool 8, costs $41,838.00 to install, $2,069.00 to operate per year for 5 years at which time it will be sold for $9,038.00. The firm's cost of capital is 6.67%. What is the equivalent annual cost of the AC360? Assume that there are no taxes.
Answer format: Currency: Round to: 2 decimal places.
2. A firm is considering replacing the existing industrial air conditioning unit. They will pick one of two units. The first, the AC360, costs $26,114.00 to install, $5, 163.00 to operate per year for 7 years at which time it will be sold for $6,959.00.
The second, RayCool 8, costs $41,476.00 to install, $2,021.00 to operate per year for 5 years at which time it will be sold for $9,074.00. The firm's cost of capital is 5.08%. What is the equivalent annual cost of the RayCool8? Assume that there are no taxes.
Answer format: Currency: Round to: 2 decimal places.
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