To calculate unadjusted rate of return with depreciation:
Subtract depreciation cost from the expected cash flows along with expenses, then multiply the result by the income tax rate and subtract. Calculate average investment 10,000/2
Example: Machine Investment $10,000 4 year life , Expected cash flows 8,000 expenses 2,200 tax rate 20%
(8,000-2,500-2.200) x (1 -.20) = 2,640/5,000 = 52.80%
No. There could be omissions (for example, if you forgot to make a journal entry for depreciation) or incorrect amounts posted (such as using the wrong interest rate to calculate and accrue interest expense).
An advantage of depreciation is being able to have a tax deduction. A disadvantage is not being able to calculate the rate of depreciation for each year.
To calculate depreciation using the Written Down Value method, you start with the initial cost of the asset, subtract the accumulated depreciation from previous periods, then apply the depreciation rate to the remaining value. The formula is: Depreciation expense = (Beginning book value - Salvage value) x Depreciation rate. This method allows for higher depreciation expenses in the early years of an asset's life.
with a calculating machine
NPV/Initial Cost of Investment
by using the Net present value calculations.
10% is the rate of depreciation on air condition
What is the rate of depriciation on refigerator
What is the rate of depriciation on refigerator
Risk free rate of return or risk free return is calculated as the return on government securities of the same maturity.
by using the Net present value calculations.
Accelerated depreciation is method in which double rate for depreciation is used as compare to straight line method.