What is the equivalent annual cost (EAC)?
A)annual cost of the initial investment in an asset spread over its economic life
B)average annual cost of owning and operating an asset over its economic life
C)the market cost of replacing the service provided by an asset
D)the sum of the asset's depreciation and its operating costs in any given year
E)the difference between the profits generated by an asset and the cost of operating it

Question

Quizplus · Accepted Answer

The equivalent annual cost (EAC) is a financial metric used to assess the cost-effectiveness of different investment options by calculating the average annual cost of owning and operating an asset over its entire economic life. This includes all costs associated with the asset, such as initial investment, maintenance, and operating costs, spread out over the period the asset is expected to be used.

What Is the Equivalent Annual Cost (EAC)