You need a new air conditioner, and you are deciding between a standard model and a high-efficiency model: The standard model costs $4,500, has an expected life span of 28,000 hours of use, and uses 5 kilowatts per hour. The high-efficiency model costs $10,000, has an expected lifespan of 44,000 hours of use, and uses 4 kilowatts per hour. You expect to use the air conditioner 4,000 hours per year. The discount rate is 10% per year. Assume you pay for the electricity at the end of the year.

Questions:

a. If electricity costs $0.12 per kilowatt, what is the EAC of each model? Which model do you choose? b. At what electricity price would you be financially indifferent between the two models? (Describe how you solved for this value.)

Please include the steps to find the answers in Excel.