Which model is more cost effective

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Reference no: EM13885188

Equivalent Annual Annuity. Econo-Cool Air conditioners cost $300 to purchase, result in electricity bills of $150 per year, and last for 5 years. Luxury Air models cost $500, result in electricity bills of $100 per year and last for 8 years. The discount rate is 21%.

a. what are the equivalent annual costs of the econo-cool and Luxury air models?

b. Which model is more cost effective?

c. Now you remember that the inflation rate is expected to be 10% per year for the foreseeable future. Redo parts a and b.

Reference no: EM13885188

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