7
Amortisation and depreciation
Straight line and declining balance depreciation
Double declining balance depreciation
File: MFMaths3e_07.xls
AMORTISATION
This chapter introduces methods of amortising loans or leases and compares the result with depreciation methods for writing off equipment.
Amortisation is the reduction of the value of an asset by prorating its initial cost over a number of periods. You can calculate the payment required under an annuity and then you need to split each payment into capital and interest. Due to the compounding nature of the time value of money, more capital is outstanding in the earlier ...
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