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.
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As much as possible, do it right the first time...
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.
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RE: Depreciation, Salvage value, etc.
http://cs.thomsonreuters.com/ua/fixa/cs_us_en/ass_...,
https://www.assetworks.com/useful-life-and-depreci...
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.
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RE: Depreciation, Salvage value, etc.
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