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Depreciation, Salvage value, etc.

Depreciation, Salvage value, etc.

Depreciation, Salvage value, etc.

Hello all,
I understand that depreciation is the (rate of) reduction in value of an equipment from the moment it was purchased and put in service, and salve value is the actual worth of the equipment after n years of use during it's useful life. What is a typical range of the depreciation rate (r) of equipment (I'm thinking a reciprocating compressor used in natural gas service), will 15 to 25% be a good range. And does the equation from salvage value S = (1-r)^n a good equation to figure estimated salvage value?

Thanks a lot.
As much as possible, do it right the first time...

As much as possible, do it right the first time...

RE: Depreciation, Salvage value, etc.

You might start with:


which is what the taxes are based on.

From a purely engineering economics perspective, useful life is often defined as the point where cumulative repair costs exceed one half of the replacement cost.

TTFN (ta ta for now)
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RE: Depreciation, Salvage value, etc.

Don't forget recapture . If you have written the asset off. When you salvage it, you have to give some of that money back.

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