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A firm is considering replacing the existing industrial air conditioning unit. They will pick one...

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Finance

A firm is considering replacing the existing industrial air conditioning unit. They will pick one of two units. The first, the AC360, costs $26,480.00 to install, $5,188.00 to operate per year for 7 years at which time it will be sold for $6,875.00. The second, RayCool 8, costs $41,003.00 to install, $2,152.00 to operate per year for 5 years at which time it will be sold for $8,992.00. The firms cost of capital is 5.13%. What is the equivalent annual cost of the RayCool8? Assume that there are no taxes.

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