Equivalent annual cash flow

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Equivalent annual cash flow

Annuity with the same net present value as the company's proposed investment.

Equivalent Annual Cash Flow

The cash flow required for the annual return on an annuity to equal the return on another investment vehicle. The equivalent annual cash flow is important in analyzing the risk and opportunity cost of an annuity.
References in periodicals archive ?
After the incidental cash flows have been incorporated, the answer happens to be reversed, i.e., the equivalent annual cash flows associated with project X is [EACF.sub.X] = C = $11.47, and for project Y, it is [EACF.sub.Y] = C = $12.74, which is unchanged as expected.
The equivalent annual cash flow (EACF) method has different versions in corporate finance and asset pricing, such as the equivalent annual cost, the equivalent annuity, the equivalent annual benefits, etc.
This is the so-called equivalent annual cash flow (EACF) method.
The equivalent annual cash flow for the first 5 years (0 through 4) of the incremental cash flows is C = -$1.27.