Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter11: Determining The Cost Of Capital
Section: Chapter Questions
Problem 2Q
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Question
What is the Total equivalent annual cost?
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Step 1
Equivalent annual cost (EAC) is the annual cost of claiming, overseeing, and supporting an asset over its whole life.
Step 2
Associations likewise use EAC for capital budgeting judgment, since it causes an association to thinking about the cost-adequacy of various resources with inconsistent life expectancies.
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