There are many acceptable methods for calculating depreciation schedules, some of which are more aggressive than others. Straight line depreciation is conservative—the declining balance method is more aggressive. Sum-of-years depreciation is somewhere between the two. In this movie, I’ll show you how to use the SYD function to calculate the sum-of-years depreciation value for a given year.
- [Instructor] There are many exceptional methods…for calculating Depreciation schedules,…some of which are more aggressive than others.…The straight line depreciation method…is pretty conservative.…The declining balance method is more aggressive.…The sum of years depreciation method…is somewhere between the two.…In this movie, I will show you how to use the SYD Function…to calculate the sum of years deprecation value…for a given year.…As my sample file I'll use SumOfYears_02_04,…which you can find in the Chapter 2 folder…of your exercise files collection.…
This workbook contains a single worksheet,…and on it are the four arguments…that I need for the formula.…In C3 I have the Cost, which is what you pay for the item.…Salvage value is what you can get in return…when the item or object that you're buying…has reached the end of its useful life.…Cell C5 contains the number of years of that useful life,…in this case 30.…And finally you need to know the Period…for which you are calculating Depreciation.…
Let's go ahead and create the formula,…
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- Recall what the type argument is used to determine when using the PMT function.
- Identify what the M stands for in the ACCRINTM function.
- Name the accounting rules used by the AMORDEGRC function to assign a depreciation coefficient to an asset.
- Recall what internal rate of return generated by the IRR function should be measured against to determine if it is a good investment.
- List the three regular intervals that coupon bonds pay interest at.
- Determine the function that provides a more conservative bond evaluation compared to the DURATION function.
- Explain what the RECEIVED function shows.
Skill Level Intermediate
1. Analyzing Loans, Payments, and Interest
2. Calculating Depreciation
3. Determining Values and Rates of Return
4. Calculating Bond Coupon Dates and Security Durations
5. Calculating Security Prices and Yields
6. Analyzing Simulation Results
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