Enter the item age in years, the current replacement cost, and select the item to calculate the actual value of the appliance.
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Appliance Depreciation Formula
The following formula is used to calculate the current value of an appliance that has depreciated over a certain number of years.
CV = RCV - (DR*RCV*AGE)
- Where CV is the current cash value
- RCV is the replacement cash value
- DR is the depreciation rate (%)
- AGE is the age of the appliance in years
To calculate the current cash value from an appliance depreciation, multiply the depreciation rate by the age and the replacement value, then subtract the result from the replacement value.
Appliance Depreciation Definition
An appliance depreciation is the loss of value of any appliance due to wear and tear and replacement costs.
How to calculate appliance value?
For this example, we will be looking at a dishwasher.
First, determine the number of years of use. The dishwasher in this case has been used for 4 years.
Next, determine the replacement cash value. This is the cost of getting a new dishwasher. This is found to be $1,000.00.
Next, determine the depreciation rate. The average depreciation rate of a dishwasher is 12.40%.
Finally, calculate the value of the depreciated appliance using the formula:
CV = RCV – (DR*RCV*AGE)
= $1,000.00 – (.124*1,000*4)