Equivalent Annual Cost - EAC
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Definition of 'Equivalent Annual Cost - EAC'
The annual cost of owning an asset over its entire life. Equivalent annual cost is often used by firms for capital budgeting decisions. Eqivalent annual cost is calculated as:
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Investopedia explains 'Equivalent Annual Cost - EAC'
The equivalent annual cost equation allows a company to compare the cost effectiveness of various assets. It is best used in instances where investment projects do not have the same lifespan. Since the numerator in the equation is equivalent to Net Present Value, the equation allows managers to compare NPVs of differing projects over different periods, to accurately determine the best option.
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Search results for 'Equivalent Annual Cost (EAC)'
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http://stocks.investopedia.com/stock-analysis/2009/Chesapeake-Energy-Looks-To-The-Future-CHK-URX-EAC-DNR1104.aspx
... Energy is using are 135,000 barrels oil equivalent (BOE) and ... of natural gas, but
since the cost is only ... Encore Acquisition Company (NYSE:EAC) also has acreage ...
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