Replacement Value by Sinking Fund Method Calculator

✖Original Value of Assets at Start of Service Life Period refers to the initial cost or acquisition cost of a tangible asset when it is first put into service.ⓘ Original Value of Assets at Start of Service [V]			+10% -10%
✖Asset Value at the end of 'a' year refers to the estimated monetary worth or value of a tangible asset at the conclusion of a specific period, 'a' year, within its useful life.ⓘ Asset Value [V_a]			+10% -10%
✖Annual Interest Rate is the amount charged, expressed as a percentage of principal, by a lender to a borrower for the use of assets on annual basis.ⓘ Annual Interest Rate [i]			+10% -10%
✖Number of Years in Actual Use refers to the period of time during which a particular asset has been actively employed or utilized for its intended purpose in a business or operational context.ⓘ Number of Years in Actual Use [a]			+10% -10%
✖Service Life refers to the estimated period during which the asset is expected to provide economic benefits and be used for its intended purpose.ⓘ Service Life [n]			+10% -10%

✖Replacement Value refers to the cost of acquiring or restoring an asset with an equivalent or similar utility to replace an existing one.ⓘ Replacement Value by Sinking Fund Method [C_R]

⎘ Copy

👎

Formula

✖

Replacement Value by Sinking Fund Method

Formula

`"C"_{"R"} = ("V"-"V"_{"a"})/((((1+"i")^("a")-1)/((1+"i")^("n")-1)))`

Example

`"3.3E^10"=("50000"-"10001")/((((1+"6")^("3")-1)/((1+"6")^("10")-1)))`

Calculator

LaTeX

Reset

👍

Download Chemical Engineering Formula PDF PDF Image

Replacement Value by Sinking Fund Method Solution

STEP 0: Pre-Calculation Summary

Formula Used

Replacement Value = (Original Value of Assets at Start of Service-Asset Value)/((((1+Annual Interest Rate)^(Number of Years in Actual Use)-1)/((1+Annual Interest Rate)^(Service Life)-1)))
C_R = (V-V_a)/((((1+i)^(a)-1)/((1+i)^(n)-1)))
This formula uses 6 Variables

Variables Used

Replacement Value - Replacement Value refers to the cost of acquiring or restoring an asset with an equivalent or similar utility to replace an existing one.
Original Value of Assets at Start of Service - Original Value of Assets at Start of Service Life Period refers to the initial cost or acquisition cost of a tangible asset when it is first put into service.
Asset Value - Asset Value at the end of 'a' year refers to the estimated monetary worth or value of a tangible asset at the conclusion of a specific period, 'a' year, within its useful life.
Annual Interest Rate - Annual Interest Rate is the amount charged, expressed as a percentage of principal, by a lender to a borrower for the use of assets on annual basis.
Number of Years in Actual Use - Number of Years in Actual Use refers to the period of time during which a particular asset has been actively employed or utilized for its intended purpose in a business or operational context.
Service Life - Service Life refers to the estimated period during which the asset is expected to provide economic benefits and be used for its intended purpose.

STEP 1: Convert Input(s) to Base Unit

Original Value of Assets at Start of Service: 50000 --> No Conversion Required
Asset Value: 10001 --> No Conversion Required
Annual Interest Rate: 6 --> No Conversion Required
Number of Years in Actual Use: 3 --> No Conversion Required
Service Life: 10 --> No Conversion Required

STEP 2: Evaluate Formula

Substituting Input Values in Formula

C_R = (V-V_a)/((((1+i)^(a)-1)/((1+i)^(n)-1))) --> (50000-10001)/((((1+6)^(3)-1)/((1+6)^(10)-1)))

Evaluating ... ...

C_R = 33037214750.7368

STEP 3: Convert Result to Output's Unit

33037214750.7368 --> No Conversion Required

FINAL ANSWER

33037214750.7368 ≈ 3.3E+10 <-- Replacement Value

(Calculation completed in 00.004 seconds)

You are here -

Home » Engineering » Chemical Engineering » Plant Design and Economics » Depreciation » Replacement Value by Sinking Fund Method

Credits

Created by Heet

Thadomal Shahani Engineering College (Tsec), Mumbai

Heet has created this Calculator and 200+ more calculators!

Verified by Vaibhav Mishra

DJ Sanghvi College of Engineering (DJSCE), Mumbai

Vaibhav Mishra has verified this Calculator and 200+ more calculators!

< 8 Depreciation Calculators

Asset Value after 'a' Years

Go Asset Value = Original Value of Assets at Start of Service-(Original Value of Assets at Start of Service-Salvage Value of Asset at End of Service)*(((1+Annual Interest Rate)^(Number of Years in Actual Use)-1)/((1+Annual Interest Rate)^(Service Life)-1))

Replacement Value by Sinking Fund Method

Go Replacement Value = (Original Value of Assets at Start of Service-Asset Value)/((((1+Annual Interest Rate)^(Number of Years in Actual Use)-1)/((1+Annual Interest Rate)^(Service Life)-1)))

Depreciation by Sum of Year Digit Method

Go Depreciation = (2*(Service Life-Number of Years in Actual Use+1))/(Service Life*(Service Life+1))*(Original Value of Assets at Start of Service-Salvage Value of Asset at End of Service)

Fixed Percentage Factor using Matheson Formula

Go Fixed Percentage Factor = 1-(Salvage Value of Asset at End of Service/Original Value of Assets at Start of Service)^(1/Service Life)

Annual Depreciation by Straight-Line Method

Go Annual Depreciation per Year = (Original Value of Assets at Start of Service-Salvage Value of Asset at End of Service)/Service Life

Book Value of Process Equipment at any Time during Service Life

Go Asset Value = Original Value of Assets at Start of Service-Number of Years in Actual Use*Annual Depreciation per Year

Asset Value using Declining Balance Method

Go Asset Value = Original Value of Assets at Start of Service*(1-Fixed Percentage Factor)^Number of Years in Actual Use

Depletion Cost

Go Depletion Cost = Initial Cost*(Amount of Material Used/Original Amount of Material Purchased)

Replacement Value by Sinking Fund Method Formula

What is Tangible Asset ?

A tangible asset is a physical and material resource with inherent economic value that an individual, business, or organization owns or controls. Unlike intangible assets, which lack a physical presence, tangible assets can be touched, seen, and quantified. Examples of tangible assets include real estate properties, machinery, equipment, vehicles, inventory, and physical infrastructure. These assets are typically essential to the operations of a business and contribute to its overall financial worth. Tangible assets are accounted for on a balance sheet and are subject to depreciation, reflecting the gradual reduction in their value over time due to factors such as wear and tear or obsolescence. The management and strategic utilization of tangible assets are crucial for businesses aiming to optimize efficiency, generate revenue, and maintain financial stability.

What is Depreciation?

Depreciation is an accounting method used to allocate the cost of a tangible asset over its estimated useful life. It represents the reduction in the value of the asset over time, reflecting factors such as wear and tear, obsolescence, or the passage of time. The purpose of depreciation is to match the expense of using an asset with the revenue it generates, providing a more accurate representation of an asset's true economic cost throughout its operational life. Depreciation is crucial for financial reporting, tax purposes, and overall asset management. Common methods of calculating depreciation include straight-line depreciation, declining balance, and sum-of-the-years-digits.

How to Calculate Replacement Value by Sinking Fund Method?

Replacement Value by Sinking Fund Method calculator uses Replacement Value = (Original Value of Assets at Start of Service-Asset Value)/((((1+Annual Interest Rate)^(Number of Years in Actual Use)-1)/((1+Annual Interest Rate)^(Service Life)-1))) to calculate the Replacement Value, Replacement Value by Sinking Fund Method refers to the estimated monetary amount required to replace or renew a tangible asset at the end of its useful life. Replacement Value is denoted by C_R symbol.

How to calculate Replacement Value by Sinking Fund Method using this online calculator? To use this online calculator for Replacement Value by Sinking Fund Method, enter Original Value of Assets at Start of Service (V), Asset Value (V_a), Annual Interest Rate (i), Number of Years in Actual Use (a) & Service Life (n) and hit the calculate button. Here is how the Replacement Value by Sinking Fund Method calculation can be explained with given input values -> 3.3E+10 = (50000-10001)/((((1+6)^(3)-1)/((1+6)^(10)-1))).

FAQ

What is Replacement Value by Sinking Fund Method?

Replacement Value by Sinking Fund Method refers to the estimated monetary amount required to replace or renew a tangible asset at the end of its useful life and is represented as C_R = (V-V_a)/((((1+i)^(a)-1)/((1+i)^(n)-1))) or Replacement Value = (Original Value of Assets at Start of Service-Asset Value)/((((1+Annual Interest Rate)^(Number of Years in Actual Use)-1)/((1+Annual Interest Rate)^(Service Life)-1))). Original Value of Assets at Start of Service Life Period refers to the initial cost or acquisition cost of a tangible asset when it is first put into service, Asset Value at the end of 'a' year refers to the estimated monetary worth or value of a tangible asset at the conclusion of a specific period, 'a' year, within its useful life, Annual Interest Rate is the amount charged, expressed as a percentage of principal, by a lender to a borrower for the use of assets on annual basis, Number of Years in Actual Use refers to the period of time during which a particular asset has been actively employed or utilized for its intended purpose in a business or operational context & Service Life refers to the estimated period during which the asset is expected to provide economic benefits and be used for its intended purpose.

How to calculate Replacement Value by Sinking Fund Method?

Replacement Value by Sinking Fund Method refers to the estimated monetary amount required to replace or renew a tangible asset at the end of its useful life is calculated using Replacement Value = (Original Value of Assets at Start of Service-Asset Value)/((((1+Annual Interest Rate)^(Number of Years in Actual Use)-1)/((1+Annual Interest Rate)^(Service Life)-1))). To calculate Replacement Value by Sinking Fund Method, you need Original Value of Assets at Start of Service (V), Asset Value (V_a), Annual Interest Rate (i), Number of Years in Actual Use (a) & Service Life (n). With our tool, you need to enter the respective value for Original Value of Assets at Start of Service, Asset Value, Annual Interest Rate, Number of Years in Actual Use & Service Life and hit the calculate button. You can also select the units (if any) for Input(s) and the Output as well.

Home

FREE PDFs

🔍 Search