Enter the initial value, the monthly decrease rate, and the number of months into the calculator to determine the final value after the specified period.
Monthly Decrease Formula
The following formula is used to calculate the final value after a monthly decrease:
FV = IV * (1 - DR)^M
Variables:
- FV is the final value after the decrease
- IV is the initial value before the decrease
- DR is the monthly decrease rate (expressed as a percentage)
- M is the number of months over which the decrease occurs
To calculate the final value after a monthly decrease, multiply the initial value by the result of one minus the decrease rate raised to the power of the number of months.
What is a Monthly Decrease?
A monthly decrease refers to the reduction in value of an asset, investment, or quantity over time, calculated on a monthly basis. This decrease can be due to depreciation, amortization, consumption, or any other factors that reduce the value of the item in question. Understanding the monthly decrease rate is crucial for financial planning, budgeting, and forecasting.
How to Calculate Monthly Decrease?
The following steps outline how to calculate the final value after a monthly decrease:
- First, determine the initial value (IV).
- Next, determine the monthly decrease rate (DR) as a percentage.
- Next, determine the number of months (M) over which the decrease occurs.
- Use the formula FV = IV * (1 - DR)^M to calculate the final value (FV).
- After inserting the variables and calculating the result, check your answer with the calculator above.
Example Problem :
Use the following variables as an example problem to test your knowledge.
Initial Value (IV) = $1000
Monthly Decrease Rate (DR) = 5%
Months (M) = 12
