financial math question

[Soundguy]

been a long time since I was in an economics class.

Got a funky depreciation formula question.

As i recall, you can set a value, and then a time for complete linear straight line depreciation and graph it. select 2 points ( x,y) coordinates, and then calculate the slope. then plug the slop back in in place of one of the variables and then get a formula that expresses that function.. etc.

assuming 860,000$ value

and 25year till depreciated.

IE.. looses 1/25th value per year.. or 34,400$ / year

Anyone help me out here on the formula to express this?

Soundguy

 

[gordon21]

Do you want an Excel, algebra, or a trig type answer?

Algebra is simple: 860,000-(y*34,400)=V y=year of ownership v =deprec value Plug in 2 values to get the current value in any given year.

You can set up formulas in Excel to create a chart in about a minute or two. Excel is so good about doing all the grunt work of calculations.

If you want a 2D graph, then I will have to leave that answer to someone who remembers 10th grade trig.

Check the IRS tables to make sure you are supposed to be using 25 years. I think MACR are 27.5 years. There are lots of variations.

 

[randy41]

residential property is 27.5....commercial property is 39.

 

[jdbower]

If you put the initial value in cell A1, the time to depreciate in B1, and the current year in C1 you can use this formula to calculate the depreciated value:
=IF(C1<B1,A1*(B1-C1)/B1,0)

Essentially it says if you're at or beyond the fully depreciated time you should list $0. If it's not fully depreciated you want the initial value times the percent remaining. This will also allow you to change the length of the depreciation easily if you need to. Naming the calls may make the formula make more sense:
=IF(Current_Year<Time_To_Depreciation, Initial_Value*(Time_To_Depreciation-Current_Year)/Time_To_Depreciation, 0)

 

[Soundguy]

Thanks guys.

I knw the 25yr # might be wrong.. of fthe top of my head I was just plopping it out as an example.

I think I got what I need! algebra answer will do fine. I can run the graph/trig IF I need to later on.

And yes.. I use excell.. or at least quattro pro.. close enough!

thanks

soundguy