reducing balance method

dwkaye

hi
does anybody know of a formular to find out the reducing balance percentage when only given the amount and number of years particually odd years, say £1,000 over 5 years. the answer is 50% but i would like to know how they got to that
regards dean

SandyHood

If you mean that 5 years depreciation was worth 50% of the value of the asset and that was £1,000.
Then

1. Take the 1000 of residual value at the end of the 5 years
2. Divide by the 2000 original value
3. To get your 50%
4. Find the 5th root of this .......... 0.870551
5. 1 minus this figure gives you the annual rate 12.945%

1-((Original cost/Residual value)^(1/life))

Cullen

God, you are good.......

sarahwilson

Crikey Sandy thats clever:001_smile: