Equivalent annual benefit

Equivalent annual benefit divides the project's NPV by the annuity factor for its life and discount rate. It expresses the value created as a level annual amount, which can help compare alternatives of unequal lives when repetition and comparable service assumptions are justified. Unlike equivalent annual cost, it incorporates both receipts and payments. The method is not automatically appropriate for one-off opportunities, changing replacement technologies or projects with different constraints. Compare benefits on a consistent risk, currency and price basis, and state why an annual comparison fits the decision.