A firm is considering replacing the existing industrial air conditioning unit. They will pick one of two units. The first, the AC360, costs $26,083.00 to install, $5,122.00 to operate per year for 7 years at which time it will be sold for $7,108.00. The second, RayCool 8, costs $41,947.00 to install, $2,056.00 to operate per year for 5 years at which time it will be sold for $8,940.00. The firms cost of capital is 6.95%. 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 $26,305.00 to install, $5,035.00 to operate per year for 7 years at which time it will be sold for $6,848.00. The second, RayCool 8, costs $41,155.00 to install, $2,181.00 to operate per year for 5 years at which time it will be sold for $9,037.00. The firms cost of capital is 6.12%. What is the equivalent annual cost of the RayCool8? Assume that there are no taxes.