Question
Econo-Cool air conditioners cost $500 to purchase, result in electricity bills of $350 per year, and last for five years. Luxury Air models cost $700,
Econo-Cool air conditioners cost $500 to purchase, result in electricity bills of $350 per year, and last for five years. Luxury Air models cost $700, result in electricity bills of $300 per year, and last for eight years. The discount rate is 21%.
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What is the equivalent annual cost of the Econo-Cool model? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
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What is the equivalent annual cost of the Luxury Air model? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
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Which model is more cost-effective?
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If the inflation rate is expected to be 10% per year for the foreseeable future. What is the equivalent annual cost of the Econo-Cool model and Luxury Air model? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
a.EAC(Econo-Cool Investment &Electricity)b.EAC(Luxury Air Investment & Electricity)c.Cost effective modeld.EAC(Econo-Cool Investment &Electricity)EAC(Luxury Air Investment & Electricity)
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Quantitative Finance Its Development Mathematical Foundations And Current Scope
Authors: T. Wake Epps
1st Edition
0470431997, 9780470431993
