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reducing balance method

dwkayedwkaye Just JoinedRegistered Posts: 1
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


  • SandyHoodSandyHood Font Of All Knowledge Registered, Moderator Posts: 2,034
    If you mean that 5 years depreciation was worth 50% of the value of the asset and that was £1,000.
    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))
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  • CullenCullen Experienced Mentor Registered Posts: 592
    God, you are good.......
  • sarahwilsonsarahwilson Experienced Mentor Registered Posts: 567
    Crikey Sandy thats clever:001_smile:
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