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

• Slice
• Dynamic
• Indexes and arrays: An introduction
• User-Defined Functions