Question: You are calculating Equivalent Annual Cost (EAC) to evaluate replacement options. The following describes one of the options: Purchase cost = $45,000 Installation cost =

You are calculating Equivalent Annual Cost (EAC) to evaluate replacement options. The following describes one of the options: Purchase cost = $45,000 Installation cost = $6,000 Useful Life = 12 years Depreciation Rate (Declining Balance) = 8%/yr O&M cost (year 1) = $4,500 Annual increase in O&M cost = 15% MARR = 7% Determine the EAC Total for the 6th year of ownership

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