(Please explain)

A firm is considering replacing the existing industrial air conditioning unit. They will pick one of two units. The first, the AC360, costs $26,400.00 to install, $5,155.00 to operate per year for 7 years at which time it will be sold for $6,984.00. The second, RayCool 8, costs $41,366.00 to install, $2,172.00 to operate per year for 5 years at which time it will be sold for $9,041.00. The firms cost of capital is 6.46%. What is the equivalent annual cost of the RayCool8? Assume that there are no taxes.