Equivalent Annual Cost
Annualize a purchase and recurring costs at a chosen discount rate.
Your numbers
Equivalent annual cost
Educational estimate using your assumptions; no live rates, tax rules or investment recommendations. Returns can be negative and are not guaranteed.
Scenario comparison
Up to three snapshots in this tab. Loading one replaces the current inputs.
Formula
Use EAC = [P−S/(1+r)^n]/a(r,n)+C. P is purchase cost, S is final resale value, C is annual operating cost, r is the annual discount fraction, and n is years. a(r,n) is the sum of the end-of-year discount factors.
Annualize a purchase and recurring costs at a chosen discount rate.
Worked example
- Initial purchase
- 1000
- Annual operating cost
- 100
- End-of-life resale
- 0
- Annual discount rate (%)
- 0
- Years
- 5
- Equivalent annual cost
- 300
Scope and limitations
Educational estimate using your assumptions; no live rates, tax rules or investment recommendations. Returns can be negative and are not guaranteed.
Inputs are checked for missing values and allowed ranges. A result outside the finite numeric range is not displayed. Rounding affects display, while the calculation uses the model’s numeric precision.
Check your units and assumptions before relying on a result. Changing a label does not convert a currency or physical unit.
Formula version: d1801589e622 · Example checked: