Econo-Cool air conditioners cost $300 to purchase, result in electricity bills of $150 per year...
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Finance
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 12%.
(a) What are the equivalent annual costs of the Econo-Cool and Luxury Air models?
(b) Now you remember that the inflation rate is expected to be 5% per year for the foreseeable future. How does your answer in part a) change?
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