Equivalent Annual Cost Calculator
Compare investments with different lifespans using EAC analysis
Understanding Equivalent Annual Cost (EAC)
Equivalent Annual Cost (EAC) is a financial metric that helps compare investments or projects with different lifespans by converting their total costs into equivalent annual amounts.
Key Components of EAC
Cost Elements
- Initial investment
- Operating costs
- Maintenance expenses
- Salvage value
- Time value of money
Applications
- Equipment replacement decisions
- Project comparisons
- Investment analysis
- Capital budgeting
- Asset management