Equipment Cost
- purchase expense
- salvage value
- tax savings from depreciation
- major repairs and overhauls
- property taxes
- insurance
- storage
Depreciation can be calculated several ways, the simplest is the straight-line method. The annual depreciation is constant, reducing the equipment value annually. The following are simple equations paraphrased from the Peurifoy & Schexnayder text:
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m = some year in the future N = equipment useful life (years) and Dn = Annual depreciation amount
Book value (BV) in year m
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example: N = 5 purchase price = $350,000 m = 3 years from now
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Read more about this topic: Heavy Equipment (construction)
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