Formula needed

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Vv20

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Hello
Looking for formula so i can calculate reverse depreciation.
I am looking to find the original cost of an asset, which has been diminishing depreciated for 3 years, at 25% rate with a book value of $4050.
I have googled and youtubed, but unable to find a reference to help.
This is what i have done:
= 4050 * 0.25 = 1012.5 + 4050 = 5062.5
= 5062.5 * 0.25 = 1265.625 + 5062.5 = 6328.125
= 6328.125 * 0.25 = 1582.03125 + 6328.125 = 7910.15625
Original price = $7910.16
I put my original price into a depreciation calculator, and it answered that the rate was 20% not 25%. Im missing 0.05 from my rate, so i must have missed something.
Hoping someone can help with a formula.
 
Last edited:
Vv20 said:
Hello
Looking for formula so i can calculate reverse depreciation.
I am looking to find the original cost of an asset, which has been diminishing depreciated for 3 years, at 25% rate with a book value of $4050.
I have googled and youtubed, but unable to find a reference to help.
This is what i have done:
= 4050 * 0.25 = 1012.5 + 4050 = 5062.5
= 5062.5 * 0.25 = 1265.625 + 5062.5 = 6328.125
= 6328.125 * 0.25 = 1582.03125 + 6328.125 = 7910.15625
Original price = $7910.16
I put my original price into a depreciation calculator, and it answered that the rate was 20% not 25%. Im missing 0.05 from my rate, so i must have missed something.
Hoping someone can help with a formula.
Click to expand...
Go the other way:

Assume that the original price was P

Assume that the depreciation rate is d.

Then

after one year depreciated value is = P * (1 - d)

after two years depreciated value is = P * (1 - d) * (1 - d) = P * (1 - d)2

after three years depreciated value is = (1 - d) * P * (1 - d)2 = P * (1 - d)3

so you have d = 0.25 and

4050 = P * (0.75)3

solve for P.
 
Harrish012, a value of $9600 depreciating at 25% per year, after the first year will be worth 9600- .25(9600)= 9600- 2400= $7200. After the second year it will be worth 7200- .25(7200)= 7200- 1800= $5400. And after the third year it will be worth 5400- .25(5400)= 5400- 1350= $4050.

What doesn't add up?
 
Thanks for the replies.
Let you know how the lecturer marks it (should know by tomorrow arvo)
 
Lecturer marked worksheet.
Solution: CAn = C (1 - r)^n
= $9 600
Thank you all for your assistance
 
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