Financial Mathematics

Equivalent Annual Cost

Convert a lifecycle present cost into a constant annual end-year cost.

Your numbers

Sample inputs are illustrative. Changing currency changes labels only.

Your result

Preparing the sample calculation…

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How to use this calculator

  1. Enter present value of lifecycle cost, annual effective discount rate (%), service years.
  2. Choose a display currency, then select Calculate. Results also update after a brief pause while you edit.
  3. Read the result with the assumptions below. Export details or save a second scenario to compare your choices.

Formula and method

EAC=present cost / sum((1+r)^−k), k=1…n.

Assumptions and limitations

Requires comparable service and a repeatability assumption; user supplies the full lifecycle present cost.

Worked example

With present value of lifecycle cost = 10000, annual effective discount rate (%) = 0, service years = 5, undiscounted annual allocation is approximately 2000.

What the result means

Compare recurring annual cost equivalents for assets with different service lives.

Common questions

How should I interpret undiscounted annual allocation?

Compare recurring annual cost equivalents for assets with different service lives.

What should I check before using this result?

Requires comparable service and a repeatability assumption; user supplies the full lifecycle present cost.

Methodology and transparency

Calculation specification reviewed on 2026-10-14. Mathematical implementation is tested against independent reference fixtures. This does not imply review by a licensed financial professional. Read the testing and precision policy.