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Average Investment if Salvage Value is not 0 Formula

GoAverage Investment when Salvage value is 0 Formula

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Average Investment is the money which is spent on purchasing an equipment. The average is considered because the capital may not be same due to depreciation. Check FAQs

I a = \frac{S s \cdot (n - 1) + P Capital \cdot (n + 1)}{2 \cdot n}

I_a - Average Investment?S_s - Salvage?n - Useful Life?P_Capital - Capital Cost?

Average Investment if Salvage Value is not 0 Example

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Here is how the Average Investment if Salvage Value is not 0 equation looks like with Values.

Here is how the Average Investment if Salvage Value is not 0 equation looks like with Units.

Here is how the Average Investment if Salvage Value is not 0 equation looks like.

1381.8 = \frac{456 \cdot (5 - 1) + 1999 \cdot (5 + 1)}{2 \cdot 5}

1381.8 = \frac{456 \cdot (5Year - 1) + 1999 \cdot (5Year + 1)}{2 \cdot 5Year}

1381.8 = \frac{456 \cdot (5 - 1) + 1999 \cdot (5 + 1)}{2 \cdot 5}

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Average Investment if Salvage Value is not 0 Solution

Follow our step by step solution on how to calculate Average Investment if Salvage Value is not 0?

FIRST Step Consider the formula

I a = \frac{S s \cdot (n - 1) + P Capital \cdot (n + 1)}{2 \cdot n}

Next Step Substitute values of Variables

∴

I a = \frac{456 \cdot (5Year - 1) + 1999 \cdot (5Year + 1)}{2 \cdot 5Year}

Next Step Prepare to Evaluate

∴

I a = \frac{456 \cdot (5 - 1) + 1999 \cdot (5 + 1)}{2 \cdot 5}

LAST Step Evaluate

∴

I a = 1381.8

Average Investment if Salvage Value is not 0 Formula Elements

Variables

Average Investment

Average Investment is the money which is spent on purchasing an equipment. The average is considered because the capital may not be same due to depreciation.

Symbol: I_a

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Average Investment

Salvage

Salvage value is the book value of an asset after all depreciation has been fully expensed.

Symbol: S_s

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Salvage

Useful Life

Useful Life is termed as an accounting estimate of the number of years it is likely to remain in service for the purpose of cost-effective revenue generation.

Symbol: n

Measurement: TimeUnit: Year

Note: Value should be greater than 0.

Formulas to find Useful Life

Capital Cost

Capital Cost is fixed, one-time expenses incurred on the purchase of land, buildings, construction, and equipment used in the production of goods or in the rendering of services.

Symbol: P_Capital

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Capital Cost

Other Formulas to find Average Investment

Go Average Investment when Salvage value is 0

I a = (\frac{1 + n}{2 \cdot n}) \cdot P Capital

Other formulas in Management of Construction Equipment category

Go Hourly Depreciation

D h = 0.9 \cdot \frac{C bv}{L s}

Go Life Span of Machine

L s = 0.9 \cdot \frac{C bv}{D h}

Go Book Value for New Machine

C bv = \frac{D h \cdot L s}{0.9}

Go Capital Cost when Salvage Value is 0

P Capital = \frac{2 \cdot n \cdot I a}{1 + n}

How to Evaluate Average Investment if Salvage Value is not 0?

Average Investment if Salvage Value is not 0 evaluator uses Average Investment = (Salvage*(Useful Life-1)+Capital Cost*(Useful Life+1))/(2*Useful Life) to evaluate the Average Investment, The Average Investment if Salvage Value is not 0 formula is defined as the money which is invested to purchase equipment. Since the capital value does not remain the same due to depreciation, an average value of an investment is always calculated. Average Investment is denoted by I_a symbol.

How to evaluate Average Investment if Salvage Value is not 0 using this online evaluator? To use this online evaluator for Average Investment if Salvage Value is not 0, enter Salvage (S_s), Useful Life (n) & Capital Cost (P_Capital) and hit the calculate button.

FAQs on Average Investment if Salvage Value is not 0

What is the formula to find Average Investment if Salvage Value is not 0?

The formula of Average Investment if Salvage Value is not 0 is expressed as Average Investment = (Salvage*(Useful Life-1)+Capital Cost*(Useful Life+1))/(2*Useful Life). Here is an example- 1381.8 = (456*(157784760-1)+1999*(157784760+1))/(2*157784760).

How to calculate Average Investment if Salvage Value is not 0?

With Salvage (S_s), Useful Life (n) & Capital Cost (P_Capital) we can find Average Investment if Salvage Value is not 0 using the formula - Average Investment = (Salvage*(Useful Life-1)+Capital Cost*(Useful Life+1))/(2*Useful Life).

What are the other ways to Calculate Average Investment?

Here are the different ways to Calculate Average Investment-

Average Investment=((1+Useful Life)/(2*Useful Life))*Capital Cost

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Average Investment if Salvage Value is not 0 Formula

​GoAverage Investment when Salvage value is 0 Formula

Average Investment if Salvage Value is not 0 Example

Average Investment if Salvage Value is not 0 Solution

Average Investment if Salvage Value is not 0 Formula Elements

Other Formulas to find Average Investment

Other formulas in Management of Construction Equipment category

How to Evaluate Average Investment if Salvage Value is not 0?

FAQs on Average Investment if Salvage Value is not 0

Variable Name

GoAverage Investment when Salvage value is 0 Formula