Equivalent annual cost
In finance, the equivalent annual cost (EAC) is the cost per year of owning and operating an asset over its entire lifespan. It is calculated by dividing the negative NPV of a project by the "present value of annuity factor": E A C = − N P V A t , r {\displaystyle \mathrm {EAC} =-{\frac {\mathrm {NPV} }{A_{t,r}}}} , where A t , r = 1 − 1 ( 1 + r ) t r {\displaystyle {A_{t,r}}={\frac {1-{\frac {1}{(1+r)^{t}}}}{r}}} where r is the annual interest rate and t is the number of years.