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Equivalent annual cost of the econo-cool model

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Reference no: EM132459831

Econo-Cool air conditioners cost $385 to purchase, result in electricity bills of $167 per year, and last for 5 years. Luxury Air models cost $585, result in electricity bills of $134 per year, and last for 8 years. The discount rate is 22%.

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

b. What is the equivalent annual cost of the Luxury Air model?

d-1. Now you remember that the inflation rate is expected to be 10% per year for the foreseeable future. What is the equivalent annual cost of the Econo-Cool and Luxury Air model?

Reference no: EM132459831

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