Equivalent annual cost

In finance, the equivalent annual cost (EAC) is the cost per year of owning and operating an asset over its entire lifespan. It is calculated by dividing the NPV of a project by the 'present value of annuity factor': E A C = I [ 1 − ( t d i + d ) ( 1 + 1 2 i 1 + i ) ] A n | ¯ i + ∑ n = 0 N R n ( 1 − t ) ( 1 + i ) n A n | ¯ i − S [ 1 − ( t d i + d ) ( 1 + 1 2 i 1 + i ) ] F n | ¯ i {displaystyle EAC={frac {Ileft}{A_{{overline {n|}}i}}}+{frac {sum _{n=0}^{N}{frac {{R_{n}}left(1-t ight)}{(1+i)^{n}}}}{A_{{overline {n|}}i}}}-{frac {Sleft}{F_{{overline {n|}}i}}}} In finance, the equivalent annual cost (EAC) is the cost per year of owning and operating an asset over its entire lifespan. It is calculated by dividing the NPV of a project by the 'present value of annuity factor': E A C = N P V A t , r {displaystyle EAC={frac {NPV}{A_{t,r}}}} , where A t , r = 1 − 1 ( 1 + r ) t r {displaystyle {A_{t,r}}={frac {1-{frac {1}{(1+r)^{t}}}}{r}}}