Modeling Depreciation


To model depreciation, two inputs are required:

  1. a schedule of spend to be depreciated
  2. a depreciation schedule

For this example, the index time is 10 year series with

Constant startYear = 2008
Time := Sequence (startYear, startYear + 9,1)

Example depreciation schedule is a 5yr MACRS depreciation schedule entered as a variable:

Table(time)(.2, .32, .192, .1152, .1152, .0576, 0, 0, 0, 0)

SpendOverTime is a variable indexed by time with the capital spend amounts as desired:

Table(time)(0, 0, 111, 0, 0, 0, 0, 0, 0, 0)

Create a user defined function: 

 Function_Depreciation,
 Parameters: (SpendOverTime, DepreciationSchedule),
 Definition: 
     index depr_years = copyindex(time); 
     var deprStartyr := time;
     sum(if time - depr_years + 1 < 1 then 0 else
     slice(SpendOverTime, time, Depr_years - startYear + 1)*slice(depreciationSchedule, time, time - depr_years + 1), depr_years)

Then create a depreciation test variable to check the result

Variable: DepreciationTest
definition: function_Depreciation(spendOverTime, DepreciationSchedule)

Using Dynamic

The following model models Amortization (same concept as depreciation) using Dynamic, which an approach slightly different from the above description: Fixed Amortization Schedule.ana

The model requires Analytica 4.2 or better to use. (Nothing here requires 4.2 -- it is just that some 4.2 features were used for convenience).

See Also

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