Equivalent Annuity

Its an additional feature that can be added on to a variable annuity or.

Equivalent annuity. A guaranteed income rider is one option for achieving income that you cant outlive. In other words EAA compares financial efficiency of different projects that are expected to have different life spans. It is used to compare mutually exclusive projects with unequal lives.

In simple words EAA shows the net present value of an investment as a series of equal cash flows produced by a project over its lifetime. Equivalent Annual Annuity Approach EAA What Is the Equivalent Annual Annuity Approach. Equivalent annual cash flow.

Investment A has a 6 year life and investment B has a 8 year life. The equivalent annual annuity approach is one of two methods used in capital budgeting to compare mutually exclusive projects with unequal lives. The cost per period with the same present value as the cost of buying and operating a machine.

The equivalent annual annuity or EAA represents the capital budgeting method that calculates the constant annual cash flow generated by a project over its lifespan. About Press Copyright Contact us Creators Advertise Developers Terms Privacy Policy Safety How YouTube works Test new features Press Copyright Contact us Creators. There are plenty of ways to create retirement income but only a few of them come with guarantees.

Equivalent Annual Annuity EAA. The equivalent cost per year of owning an asset over its entire life. Equivalent annual annuity Page 4 inconsistent acceptreject recommendations.

Equivalent Annual Annuity. Equivalent annual annuity EAA is an approach used in capital budgeting to choose between mutually exclusive projects with unequal useful lives. It is an insurance product.