# Equivalent annual cost

A polisher costs $10,000 and will cost $20,000 a year to operate and maintain. If the discount rate is 10 percent and the polisher will last for 5 years, what is the equivalent annual cost of the tool?

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In order to calculate the equivalent annual cost (EAC), we first find the PV of all costs

The ...

#### Solution Summary

The solution explains how to calculate the equivalent annual cost

$2.19