Question
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
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.
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The equivalent annual cost of the RayCool8 is 1057681 We can calculate the equival...
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Financial Management Principles and Applications
Authors: Sheridan Titman, Arthur J. Keown, John H. Martin
13th edition
134417216, 978-0134417509, 013441750X, 978-0134417219
