Equivalent Annual Cost (EAC)

Equivalent Annual Cost (EAC)

Equivalent annual cost tells a company how much it costs per year to own, operate and maintain an asset over its useful life. Applying the EAC formula enables company managers to compare different assets with different useful lives in a standardised way to facilitate purchase decisions, or to calculate whether it is more cost-efficient to own, operate and maintain an asset over its life or to lease it.

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