A firm is considering replacing the existing industrial air conditioning unit. They will pick one of two units. The first, the AC360, costs $26,914.00 to install, $5,104.00 to operate per year for 7 years at which time it will be sold for $7,136.00. The second, RayCool 8, costs $41,261.00 to install, $2,003.00 to operate per year for 5 years at which time it will be sold for $9,035.00. The firms cost of capital is 5.35%. What is the equivalent annual cost of the RayCool8? Assume that there are no taxes.

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