Eac and eab

Used to evaluate projects or assets, but they serve different purposes.

EAB is used to compare the annual benefits of different projects. It is not a standard acronym and is less commonly used. It is calculated by dividing the Net Present Value (NPV) of the benefits by the annuity factor.

EAC is a more standard metric used to compare the annual costs of different projects or assets, especially when they have unequal lives. It is calculated by dividing the NPV of the costs by the relevant annuity factor. The EAC approach is particularly useful when comparing assets with different replacement cycles, as it allows for a fair comparison by converting the costs into an equivalent annual amount.

Yes, EAC can be applied in situations where the assets or projects have unequal lives. to make a fair comparison by converting the total costs into an equivalent annual cost, allowing for a more straightforward decision-making process.