Annual Depreciation
Annual depreciation depends on the cost to buy the machine, the cost to install the machine, and salvage value. aPriori uses linear depreciation, and starting point VPEs typically assume no salvage value. For most machines, aPriori depreciates the machine over 15 years.
Machine costs are obtained from a number of sources, usually the machine manufacturer or a reseller. In some cases aPriori estimates the cost of the machine by considering the cost of similar machines.
The following formulas show how depreciation is calculated:
Annual Depreciation = (Total Cost of Machine - Salvage Value) / Machine Life
Total Cost of Machine = Machine Price + Installation Cost
Machine price (specified by the machine property Machine Price)
Installation Cost = Machine Price * Installation Cost Percent
Machine price (specified by the machine property Machine Price)
Installation cost percent (specified by the machine property Installation Cost Percent)
Salvage Value = Machine Price * Salvage Value Percent
Machine price (specified by the machine property Machine Price)
Salvage value percent (specified by the machine property Salvage Value Percent)
Machine Life (specified by the machine property Machine Life)