Calculate
Depreciation
In this
article we’re going to calculate depreciation by implementing two
relevant formulas:
rate and amount.
1.
Depreciation
Rate
This
code calculates the annual depreciation rate of an investment. You must
provide
the original price of the item, its resale price, and its age in years.
The depreciation
rate is calculated by the following formula:
where:
D
=
depreciation rate
T
=
resale price
P
=
original price
Y
= age
This is
our simple Matlab code to calculate the above formula:
function dr =
depreciation_rate(p,t,y)
dr =
100*(1(t/p)^(1/y));
We create another script to test and drive the above mfile:
clc,
clear, format compact, format bank
p =
input('Enter
original price: ');
t =
input('Enter
resale price: ');
y =
input('Enter
number of years: ');
dr =
depreciation_rate(p,t,y)
Example:
Jill
bought her car for $4933.76 and sold it for $2400 three years later.
What was
its actual depreciation rate?
We
launch our helpful code, and get:
Enter
original
price: 4933.76
Enter
resale price: 2400
Enter
number of years: 3
The
result is:
dr
= 21.35
(%)
2.
Depreciation Amount
This
section calculates the amount depreciated within a given year for a
depreciating investment. You must provide the original price of the
investment,
its depreciation rate, and the year of depreciation.
The
depreciation amount is claulated by the following formula:
where:
D
=
depreciation amount
P
=
original price
i =
depreciation rate
Y
=
year of depreciation
This is
our simple Matlab code to calculate the above formula:
function da =
depreciation_amount(p,i,y)
i =
i/100;
da =
p*i*(1i)^(y1);
We create another script
to test and drive the above mfile:
clc,
clear, format compact, format bank
p =
input('Enter
original price: ');
i =
input('Enter
depreciation rate: ');
y =
input('Enter
year of depreciation: ');
da =
depreciation_amount(p,i,y)
Example:
Jill
bought her car for $4933.76. Her model car depreciates at an average
annual
rate of 21%. What amount has the car depreciated in the first year?
We now
launch our also helpful new code...and...
Enter
original price: 4933.76
Enter
depreciation rate: 21
Enter
year of depreciation: 1
The
result is:
da
= 1036.09
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Depreciation' to home
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'Calculate Depreciation' to 'Finance Formulas'
