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What is the equivalent annual cost

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Question - A firm is considering replacing the existing industrial air conditioning unit. They will pick one of two units. The first, the AC360, costs $26,328.00 to install, $5,056.00 to operate per year for 7 years at which time it will be sold for $6,984.00. The second, Ray Cool 8, costs $41, 141.00 to install, $2, 169.00 to operate per year for 5 years at which time it will be sold for $8,906.00. The firm's cost of capital is 5.98%. What is the equivalent annual cost of the AC360? Assume that there are no taxes.

Reference no: EM133067888

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