Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. a firm is considering replacing the existing indus

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

80.2K

Verified Solution

Question

Finance

A firm is considering replacing the existing industrial airconditioning unit. They will pick one of two units. The first, theAC360, costs $26,225.00 to install, $5,116.00 to operate per yearfor 7 years at which time it will be sold for $7,059.00. Thesecond, RayCool 8, costs $41,570.00 to install, $2,133.00 tooperate per year for 5 years at which time it will be sold for$8,964.00. The firm’s cost of capital is 5.32%. What is theequivalent annual cost of the AC360?

Answer & Explanation Solved by verified expert
4.0 Ratings (715 Votes)
We first compute the NPV using excel NPV    See Answer
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Transcribed Image Text

A firm is considering replacing the existing industrial airconditioning unit. They will pick one of two units. The first, theAC360, costs $26,225.00 to install, $5,116.00 to operate per yearfor 7 years at which time it will be sold for $7,059.00. Thesecond, RayCool 8, costs $41,570.00 to install, $2,133.00 tooperate per year for 5 years at which time it will be sold for$8,964.00. The firm’s cost of capital is 5.32%. What is theequivalent annual cost of the AC360?

Other questions asked by students

Q

The acid dissociation constant of the 1,10-phenanthrolium ion (phen) was meeasured at different temperatures using spectroscopic methods. The...

Chemistry
Q

1. Vanadium crystallizes in a body-centered cubic lattice, and the length of the edge of a...

Chemistry
Q

Answer the following questions with respect to transcription: What is the template? What is the name of the...

Biology
Q

•Hydrogen bonding between water molecules is essential for lung expansion to occur, but also increases resistance...

Medical Sciences
Q

(a) Explain briefly what is meant by atmospheric pressure, and why it decreases with altitude. (b) Explain...

Physics
Q

In circle C CD 3 and the area of shaded sector 37 Find the length...

Geometry
Q

Question 31 1 po 4 Listen aved 40 How long will it take a colony...

Basic Math
Q

Etermine the half range Fourier cosine series in the range x=0 to x=7t forthe following...

Algebra
Q

Cheryl, age 58, is the owner of a closely-held partnership business which makes up 65%...

Accounting
Q

00 on Mclin Products Company manufactures colonial style desks. Some of the company's data was...

Accounting
Q

ROI, Residual Income Raddington Industries produces tool and die machinery for manufacturers. The company expanded...

Accounting
Q

Francine's customer paid her $500 to repair five chairs. At the end of the reporting...

Accounting