How to Find the Depreciation Rate

Learn how to how to find the Depreciation Rate (in percent) with the following formula and example:

Formula:
Rate of Depreciation = Annual depreciation / Total depreciation

Example:
Calculate the rate of depreciation of a car from the following data:
Cost: $45,000
Expected Life: 20 years
Scrap Value: $5,000

Answer:
Total depreciation = 45000 - 5000 = $40,000
Annual depreciation = (45000-5000)/20 = $2,000
Rate of Depreciation = 2000/40000 = 0.05 = 5%
0 comments: