The equivalent annual cost method of analysis is used to evaluate projects with _____ economic lives where the assets _____ be replaced when they are worn out.

Question

Quizplus · Accepted Answer

The equivalent annual cost (EAC) method is particularly useful for comparing projects or assets with different economic lives, under the assumption that these assets will be replaced at the end of their useful lives. This method allows for a uniform annual cost to be calculated for each option, making it easier to compare the long-term financial impact of each choice.

The Equivalent Annual Cost Method of Analysis Is Used to Evaluate