A firm is considering replacing the existing industrial air conditioning unit. They will pick one of two units. The first, the AC360, costs $26,024.00 to install, $5,105.00 to operate per year for 7 years at which time it will be sold for $7,161.00. The second, RayCool 8, costs $41,708.00 to install, $2,083.00 to operate per year for 5 years at which time it will be sold for $8,978.00. The firms cost of capital is 5.23%. What is the equivalent annual cost of the AC360?

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A firm is considering replacing the existing industrial air conditioning unit. They will pick one of two units. The first, the AC360, costs $26,500.00 to install, $5,117.00 to operate per year for 7 years at which time it will be sold for $6,875.00. The second, RayCool 8, costs $41,210.00 to install, $2,093.00 to operate per year for 5 years at which time it will be sold for $9,096.00. The firms cost of capital is 6.16%. What is the equivalent annual cost of the RayCool8?

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