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Econo-Cool air conditioners cost $340 to purchase, result in electricity bills of $158 per year, and last for 5 years. Luxury Air models cost $540,

Econo-Cool air conditioners cost $340 to purchase, result in electricity bills of $158 per year, and last for 5 years. Luxury Air models cost $540, result in electricity bills of $116 per year, and last for 8 years. The discount rate is 23%.

a. What is the equivalent annual cost of the Econo-Cool model? (Do not round intermediate calculations. Round your answers to 2 decimal places.)

b. What is the equivalent annual cost of the Luxury Air model? (Do not round intermediate calculations. Round your answers to 2 decimal places.)

c. Which model is more cost-effective?

multiple choice 1

  • Econo-Cool

  • Luxury Air

d-1. Now you remember that the inflation rate is expected to be 10% per year for the foreseeable future. What is the equivalent annual cost of the Econo-Cool and Luxury Air model? (Do not round intermediate calculations. Round your answers to 2 decimal places.)

d-2. Which model is more cost-effective?

multiple choice 2

  • Econo-Cool

  • Luxury Air

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