Annual Cost of Equipment
 

Trying to work out the annual cost of machinery purchase but having
difficulty getting a function which seems to incorporate all that needs
to be considered. The parameters I have are, putting them in cells for
easier reference.
A1 Original Cost
A2 Period of depreciation (use)
A3 Interest rate
A4 Salvage value

What I am trying to get is the annual cost of purchasing this equipment.
I appreciate you can have situations where the cost is higher in the
initial years but I am not really bothered with this, it is the average
cost.
I had tried using the SLN function but this does not take in the
interest rate. There is also an annual repair charge to be added but I
do not think this could be incorporated into the function.
I would value any guidance.

Kind regards
Graham Haughs
Turriff, Scotland

Annual Cost of Equipment
 

Hi Graham,

=PMT(A3,A2,A1,A4)

The sign of the answer will be opposite to that of PV and FV.

Percentages should be given as fractions: 5% is 0.05 (which again can be entered as 5%!)

--
Kind regards,

Niek Otten
Microsoft MVP - Excel

"Graham Haughs" wrote in message ...
| Trying to work out the annual cost of machinery purchase but having
| difficulty getting a function which seems to incorporate all that needs
| to be considered. The parameters I have are, putting them in cells for
| easier reference.
| A1 Original Cost
| A2 Period of depreciation (use)
| A3 Interest rate
| A4 Salvage value
|
| What I am trying to get is the annual cost of purchasing this equipment.
| I appreciate you can have situations where the cost is higher in the
| initial years but I am not really bothered with this, it is the average
| cost.
| I had tried using the SLN function but this does not take in the
| interest rate. There is also an annual repair charge to be added but I
| do not think this could be incorporated into the function.
| I would value any guidance.
|
| Kind regards
| Graham Haughs
| Turriff, Scotland

Annual Cost of Equipment
 

<The sign of the answer will be opposite to that of PV and FV

WRONG!!

FV must have an opposite sign and of course that will also be the sign of the answer. Both flow in the same direction

--
Kind regards,

Niek Otten
Microsoft MVP - Excel

"Niek Otten" wrote in message ...
| Hi Graham,
|
| =PMT(A3,A2,A1,A4)
|
| The sign of the answer will be opposite to that of PV and FV.
|
| Percentages should be given as fractions: 5% is 0.05 (which again can be entered as 5%!)
|
| --
| Kind regards,
|
| Niek Otten
| Microsoft MVP - Excel
|
| "Graham Haughs" wrote in message ...
|| Trying to work out the annual cost of machinery purchase but having
|| difficulty getting a function which seems to incorporate all that needs
|| to be considered. The parameters I have are, putting them in cells for
|| easier reference.
|| A1 Original Cost
|| A2 Period of depreciation (use)
|| A3 Interest rate
|| A4 Salvage value
||
|| What I am trying to get is the annual cost of purchasing this equipment.
|| I appreciate you can have situations where the cost is higher in the
|| initial years but I am not really bothered with this, it is the average
|| cost.
|| I had tried using the SLN function but this does not take in the
|| interest rate. There is also an annual repair charge to be added but I
|| do not think this could be incorporated into the function.
|| I would value any guidance.
||
|| Kind regards
|| Graham Haughs
|| Turriff, Scotland
|
|

Annual Cost of Equipment
 

Many thanks for that Nick.

Graham

Niek Otten wrote:
<The sign of the answer will be opposite to that of PV and FV

WRONG!!

FV must have an opposite sign and of course that will also be the sign of the answer. Both flow in the same direction