Annual Cost of Equipment

[Graham Haughs]

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

 

[Niek Otten]

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

| 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

 

[Niek Otten]

<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

| 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
|
|| 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
|
|

 

[Graham Haughs]

Many thanks for that Nick.

Graham