Intro The Fairmont Hotel in San Francisco needs to replace its air conditioning system There are two alternatives, both of which can do the job equally well: Machine name Purchase price Operating cost (end of each year) Useful life (years) Straight line depreciation to zero over (years) Salvage value at end of useful life AC 1 AC 2 $40,000 $60,000 $17,000 $8,000 4 6 4 6 $0 $0 The relevant discount rate is 10% and the marginal tax rate is 35%. Part 1 IB Attempt 6/6 for 10 pts. What is the operating cash flow for AC 1 per year? 0+ decimals Submit Part 2 B Attempt 3/6 for 10 pts. What is the equivalent annual cost for AC 1 (in absolute terms)? O decimals esc Part 2 IBAttempt 3/6 fo What is the equivalent annual cost for AC 1 (in absolute terms)? 0+ decimals Submit Part 3 IB Attempt 3/6 for 10 What is the operating cash flow for AC 2 per year? 0+ decimals Submit Part 5 B Attempt 1/2 for 10 pts. Which AC system should the company buy? The system with the higher equivalent annual cost The system with the lower equivalent annual cost Correct & esc 0