A firm is considering replacing the existing industrial air conditioning unit. They will pick one of two units. The first, the AC360, costs $26,524.00 to install, $5,077.00 to operate per year for 7 years at which time it will be sold for $6,800.00. The second, RayCool 8, costs $41,380.00 to install, $2,051.00 to operate per year for 5 years at which time it will be sold for $8,967.00. The firms cost of capital is 5.62%. 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 $26,541.00 to install, $5,077.00 to operate per year for 7 years at which time it will be sold for $6,850.00. The second, RayCool 8, costs $41,219.00 to install, $2,158.00 to operate per year for 5 years at which time it will be sold for $8,969.00. The firms cost of capital is 6.56%. What is the equivalent annual cost of the RayCool8? Assume that there are no taxes.

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