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Thread: Formula (Excel 2003)

20090916, 23:39 #1
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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 (20000020000 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.Regards
Prasad

20090917, 05:41 #2
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[quote name='prasad' post='793668' date='17Sep2009 06:39']PS : Here is a WELCOME drink for Hans. [/quote]
Thank you!
I think this will do what you want:
=A2*(1(1B2)^C2)
where A2 is the purchase value, B2 the depreciation rate and C2 the period.

20090917, 05:58 #3
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[quote name='HansV' post='793691' date='17Sep2009 16:11']Thank you!
I think this will do what you want:
=A2*(1(1B2)^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

20090917, 07:13 #4
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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 * (1RA)^n
So the total depreciation is PV  PV * (1RA)^n = PV * (1  (1RA)^n)

20090917, 07:28 #5
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[quote name='HansV' post='793706' date='17Sep2009 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 * (1RA)^n
So the total depreciation is PV  PV * (1RA)^n = PV * (1  (1RA)^n)[/quote]
Got it Hans, Thank you very much for providing such simple solutions.Regards
Prasad