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  1. #1
    3 Star Lounger
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    I know, there is a simple mathmetical formula but I am unable to recall it. I want to calculate the accumulated depreciation in D2 based on reducing balance i.e. for 1st year, @10% on initial value of 200000, in 2nd year @10% on depreciated value (200000-20000 being depreciation of first year) and so on. Pls note that all parameters are variable.

    Any help would be highly appreciated.

    PS : Here is a WELCOME drink for Hans.
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    Regards
    Prasad

  2. #2
    Plutonium Lounger
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    [quote name='prasad' post='793668' date='17-Sep-2009 06:39']PS : Here is a WELCOME drink for Hans. [/quote]
    Thank you!

    I think this will do what you want:

    =A2*(1-(1-B2)^C2)

    where A2 is the purchase value, B2 the depreciation rate and C2 the period.

  3. #3
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    [quote name='HansV' post='793691' date='17-Sep-2009 16:11']Thank you!

    I think this will do what you want:

    =A2*(1-(1-B2)^C2)

    where A2 is the purchase value, B2 the depreciation rate and C2 the period.[/quote]
    Excellent Hans, thank you very much. Can you explain the approach a little bit, plz?
    Regards
    Prasad

  4. #4
    Plutonium Lounger
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    Let's take your example of 10% depreciation.
    After the first period, 90% remains, after the second period 90% of those 90%, after the third period 90% of that, etc.
    So the remaining value after n periods is 90% * 90% * .... * 90%.

    Now in more mathematical terms:

    Present value PV.
    Depreciation rate RA.
    After n years, the remaining value is PV * (1-RA)^n
    So the total depreciation is PV - PV * (1-RA)^n = PV * (1 - (1-RA)^n)

  5. #5
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    [quote name='HansV' post='793706' date='17-Sep-2009 17:43']Let's take your example of 10% depreciation.
    After the first period, 90% remains, after the second period 90% of those 90%, after the third period 90% of that, etc.
    So the remaining value after n periods is 90% * 90% * .... * 90%.

    Now in more mathematical terms:

    Present value PV.
    Depreciation rate RA.
    After n years, the remaining value is PV * (1-RA)^n
    So the total depreciation is PV - PV * (1-RA)^n = PV * (1 - (1-RA)^n)[/quote]
    Got it Hans, Thank you very much for providing such simple solutions.
    Regards
    Prasad

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