Enter the asset price, discount rate, and the number of periods into the calculator to determine the equivalent annual cost.

## EAC Formula

The following formula is used to calculate an equivalent annual cost.

EAC = (AP * DR)/(1-(1+DR)^{-n})

- Where EAC is the equivalent annual cost
- AP is the asset price
- DR is the discount rate
- n is the number of periods

## EAC Definitoin

EAC is defined as the equivalent annual cost and is a measure of the true cost of owning an asset over it’s lifetime.

## EAC Example

How to calculate EAC.

**First, determine the asset price.**Calculate the initial price of the asset being purchase.

**Next, determine the life span of the asset.**This will be the number of periods referenced in the formula above.

**Next, determine the discount rate.**A discount rate is a measure of the return rate required to make a project worth the time.

**Finally, calculate the EAC.**Calculate the equivalent annual cost using the formula for EAC presented above.

## FAQ

**What is EAC?**

EAC stands for equivalent annual cost. It’s a measure of the annual cost of owning and operating an asset over its lifetime.