A firm is considering replacing the existing industrial air conditioning unit. They will pick one of two units. The first, the AC360, costs $26,962.00 to install, $5,119.00 to operate per year for 7 years at which time it will be sold for $7,048.00. The second, RayCool 8, costs $41,852.00 to install, $2,065.00 to operate per year for 5 years at which time it will be sold for $8,999.00. The firms cost of capital is 5.23%. What is the equivalent annual cost of the AC360? Assume that there are no taxes.

A firm is considering replacing the existing industrial air conditioning unit. They will pick one of two units. The first, the AC360, costs $26,445.00 to install, $5,198.00 to operate per year for 7 years at which time it will be sold for $7,119.00. The second, RayCool 8, costs $41,761.00 to install, $2,088.00 to operate per year for 5 years at which time it will be sold for $8,984.00. The firms cost of capital is 5.13%. What is the equivalent annual cost of the RayCool8? Assume that there are no taxes.

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