A firm is considering replacing the existing industrial air conditioning unit. They will pick one of two units. The first, the AC360, costs $26,338.00 to install, $5,009.00 to operate per year for 7 years at which time it will be sold for $7,013.00. The second, RayCool 8, costs $41,742.00 to install, $2,144.00 to operate per year for 5 years at which time it will be sold for $8,979.00. The firms cost of capital is 5.70%. 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 $26,912.00 to install, $5,028.00 to operate per year for 7 years at which time it will be sold for $7,018.00. The second, RayCool 8, costs $41,128.00 to install, $2,078.00 to operate per year for 5 years at which time it will be sold for $9,008.00. The firms cost of capital is 6.03%. What is the equivalent annual cost of the RayCool8? Assume that there are no taxes.