A firm is considering replacing the existing industrial air conditioning unit. They will pick one of two units. The first, the AC360, costs $26,123.00 to install, $5,122.00 to operate per year for 7 years at which time it will be sold for $7,140.00. The second, RayCool 8, costs $41,928.00 to install, $2,144.00 to operate per year for 5 years at which time it will be sold for $9,039.00. The firms cost of capital is 5.10%. 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 $26,349.00 to install, $5,007.00 to operate per year for 7 years at which time it will be sold for $7,154.00. The second, RayCool 8, costs $41,085.00 to install, $2,092.00 to operate per year for 5 years at which time it will be sold for $8,973.00. The firms cost of capital is 5.58%. What is the equivalent annual cost of the AC360? Assume that there are no taxes.