Equivalent Annual Cost Calculator
Spread an asset’s discounted ownership costs into an equivalent annual amount.
Your result
FINANCIALEnter your values and select calculate.
On this page How it works & practical examples
How to use the Equivalent Annual Cost Calculator
Operating costs occur at each year end and salvage at the final year end. The annuity factor converts all entered costs to a common annual basis.
The calculation
Worked example
$10,000 purchase, $1,000 annual operation and $2,000 salvage over five years at 0% give $2,600 equivalent annual cost.
Assumptions and limits
Assumes constant operating costs and a known useful life. Does not model unequal replacement cycles, taxes or uncertainty in resale value.
Common questions
Which inputs should I use?
Operating costs occur at each year end and salvage at the final year end. The annuity factor converts all entered costs to a common annual basis.
What does the result exclude?
Assumes constant operating costs and a known useful life. Does not model unequal replacement cycles, taxes or uncertainty in resale value.