You should replace a machine when the EAC of continuing to operate it exceeds the EAC of the new machine.

Question

Quizplus · Accepted Answer

The EAC (Equivalent Annual Cost) is a method of comparing the cost effectiveness of different options over their operational lifetimes. If the EAC of continuing to operate an existing machine is higher than the EAC of purchasing and operating a new machine, it indicates that the new machine is more cost-effective in the long run, justifying the replacement of the old machine.

You Should Replace a Machine When the EAC of Continuing