Question
Econo-Cool air conditioners cost $365 to purchase, result in electricity bills of $163 per year, and last for 5 years. Luxury Air models cost $565,
Econo-Cool air conditioners cost $365 to purchase, result in electricity bills of $163 per year, and last for 5 years. Luxury Air models cost $565, result in electricity bills of $126 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?
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?
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