Financial functions(I)

DB (cost;residual_value;life;period;month) function

Returns the depreciation of an asset for a specified period, using the fixed salary declining balance method.

Cost = is the initial value of the asset.

Salvage = is the final value after the depreciation of the asset.

Life = is the number of periods during which the depreciation of the asset takes place (also known as usefull life)

Period = is the period over which you want the depreciation to be be calculated.

Month = is the number of months in the first year, if these are not specified, they are assumed to be 12.

example:

We have bought a car for 20.000€, and we will suppose that in 5 years time the value of the car will be 9.000€. We want to know what the depreciation will be 6 months after buying it.

If we introduce the data DB(20000;9000;5;1;6) it should give us the result 1.480€, that is, 6 months after buying it, the car will be worth 18.520€..

 

DDB (cost;salvage;life;period;factor) Function

Returns the depreciation of an asset over a specific period, by way of the depreciation method for double balance reduction or another specified method.

The double reduction depreciation method calculates the depreciation at a accelerated value. The depreciation is higher during the first period, and reduces over succesive periods.

Cost = is the inicial asset value

Salvage = is the value at the end of the depreciation (sometimes called the salvage value of the asset)

Life = is the number of periods over which the asset is being depreciated (sometimes called the useful life of the asset).

Period = is the period over which the depreciation is calculated.

Factor = is the value at which the balance diminishes. If factor is omitted, it is assumed to be 2 (the method of depreciation by double balance reduction.

 

Example:

We will continue with the example of the car.

Therefore if we introduce the data DDB(20000;9000;5;1) it should give us the result of 8.000€, in the first year of the cars sale it will be worth 12.000€

 

VBD (cost;salvage;life;start_period;end_period;factor;no_switch) function

Returns the depreciation of an asset for any period you specify, including partial periods, using the double-declining balance method or some other method you specify.

VDB stands for variable declining balance.

Cost = is the inicial asset value

Salvage = is the final value of the asset after depreciation.

Life = is the number of periods over which the asset is depreciated (sometimes called the useful life of the asset).

Initial_period = is the starting period for which you want to calculate the depreciation

Final_period = is the ending period for which you want to calculate the depreciation.

Factor = If factor is omitted, it is assumed to be 2 (the double-declining balance method). Change factor if you do not want to use the double-declining balance method. For a description of the double-declining balance method, see DDB.

No_Switch = is a logical value specifying whether to switch to straight-line depreciation when depreciation is greater than the declining balance calculation.

If no_switch is TRUE, Microsoft Excel does not switch to straight-line depreciation even when the depreciation is greater than the declining balance calculation.

If no_switch is FALSE or omitted, Excel switches to straight-line depreciation when depreciation is greater than the declining balance calculation.

 

Example:

If we introduce the data VBD(5000;500;5*12;0;1) it should give us a result of 166.67€, that is, in the first month of the assets sale it is worth 4833.33€(166,67€ less than when it was bought).

 

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November-2005.