In this video, you'll learn the INTUITION behind using the equivalent annual cost method in capital budgeting decisions. Specifically, you will learn WHY it is useful to calculate an investment's EAC when choosing between alternatives that have unequal lives.

This video will be particularly useful to students studying Chapter 6 (Section 6.3) of "Corporate Finance" [11th, 12th and 13th edition] by Ross, Westerfield, Jaffe and Jordan. The Chapter is titled "Making Capital Investment Decisions".

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My name is Atif Ikram. I am a Professor of Finance at Arizona State University ([ Ссылка ]).

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