Calculator Inputs
Large screens show three columns, smaller screens show two, and mobile shows one.
Example Data Table
Use this sample set to test the calculator and review the output structure.
| Asset | Purchase | Install | Annual Operating | Annual Maintenance | Annual Other | Salvage | Overhaul | Overhaul Year | Life | Rate | Sample EAC |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Packaging Line | 50,000 | 5,000 | 4,000 | 1,200 | 300 | 8,000 | 6,000 | 3 | 6 | 10% | 17,867.38 |
| Cooling Unit | 22,000 | 1,500 | 2,100 | 650 | 150 | 3,500 | 2,000 | 4 | 8 | 9% | 6,158.44 |
Formula Used
Equivalent annual cost converts a full life-cycle cost stream into one comparable yearly amount. It is commonly used when comparing assets with different lives or replacement patterns.
Capital Recovery Factor
CRF = i(1 + i)n / ((1 + i)n - 1)
Present Value of Uniform Annual Costs
PV Annual Costs = A × ((1 - (1 + i)-n) / i)
Present Value of a Future Overhaul
PV Future Cost = F / (1 + i)t
Net Present Cost
NPC = Initial Investment + PV Annual Costs + PV Future Costs - PV Salvage - PV Recovery
Equivalent Annual Cost
EAC = NPC × CRF
When the discount rate is zero, the calculator divides the total life-cycle cost by the service life instead of using the capital recovery factor.
How to Use This Calculator
- Enter a clear asset or option name so the result is easy to identify.
- Choose the currency label you want displayed in the results.
- Fill in purchase and installation costs to capture the initial investment.
- Add annual operating, maintenance, and other recurring yearly costs.
- Enter the expected salvage value and any working capital recovered later.
- Include a future overhaul cost and the year it occurs, if relevant.
- Set the service life and discount rate, then submit the form.
- Review the result block above the form and export CSV or PDF if needed.
Frequently Asked Questions
1. What does equivalent annual cost measure?
Equivalent annual cost expresses the total life-cycle cost of an asset as one uniform yearly amount. It helps compare alternatives that have different purchase prices, salvage values, operating costs, and useful lives.
2. Why is discount rate important here?
The discount rate adjusts future costs and recoveries into present value terms. A higher rate reduces the present effect of future expenses and salvage, which changes the annualized ownership cost.
3. Should I include maintenance inside operating cost?
You can, but keeping maintenance separate improves clarity. This calculator adds annual operating, maintenance, and other yearly costs together before converting them into an annualized equivalent cost.
4. What is a good use case for EAC?
EAC is useful when choosing between machines, vehicles, systems, or projects that serve the same purpose but last for different lengths of time. Lower annualized cost usually indicates the more economical option.
5. Can this calculator handle a one-time future overhaul?
Yes. Enter the overhaul amount and the year it happens. The calculator discounts that future cost back to present value before adding it to the net present cost.
6. What happens when discount rate is zero?
When the discount rate is zero, future amounts are not discounted. The calculator totals the full life-cycle cost and divides it directly by the service life to produce the annual figure.
7. Is a lower equivalent annual cost always better?
For alternatives delivering the same required output, a lower EAC generally means lower annualized ownership cost. However, you should still consider reliability, risk, capacity, and performance differences before deciding.
8. Can I export the result for reporting?
Yes. After calculation, use the CSV button for spreadsheet-friendly output or the PDF button for a shareable file. Both export options use the result summary shown above the form.