Econo-Cool air conditioners cost R500 to purchase, result in electricity bills of R250 per year, and last for 3 years. Luxury Air models cost R700, result in electricity bills of R300 per year, and last for 9 years. The discount rate is 10%.

Please answer the below:

a. What is the equivalent annual cost of the Econo-Cool model and the Luxury Air model?

b. Which model is more cost-effective?

c. Considering that the inflation rate is expected to be 15% per year for the foreseeable

future. Redo parts (a) and (b).