Declining Balance Depreciation Calculator
What something is worth after a number of years when it loses the same percentage of its remaining value every year.
Results
What this tool does
Cars, phones and machinery do not lose value in equal instalments. They lose a proportion of what they are still worth, which means a great deal in the first year and progressively less afterwards. This page follows that curve: give it the price when new, how fast it drops and how long you have had it, and it returns what is left, what has gone, what went in the last year alone, and where it will be a year from now.
Formula
value = cost × (1 − rate)^years
Variables
| Symbol | Meaning | Unit |
|---|---|---|
c | What it cost new | — |
r | Loses this much each year | % |
n | Years from new | a |
V | Worth now | — |
L | Lost in value | — |
Y | Lost in the last year | — |
S | Of the original value left | % |
N | Worth a year from now | — |
Worked example
- What it cost new30,000
- Loses this much each year15 %
- Years from new5 a
- Worth now13,311.16
- Lost in value16,688.84
- Lost in the last year2349.03
- Of the original value left44.4 %
- Worth a year from now11,314.49
Limitations
- The result is an estimate based only on the values you type. Real situations often include factors this calculator does not know about.
- This is an informational calculator, not personalised financial advice. Rates, fees, taxes and contract conditions vary between institutions and countries.
Frequently asked questions
How is this different from the straight-line calculator?
Straight-line takes the same amount away every year, which is what accounting rules usually require. This one takes the same percentage away every year, so the loss is large at the start and small later. That is a far better description of what actually happens to a car, a phone or a laptop, where most of the value goes in the first two years and the curve flattens out afterwards.
What rate should I use?
Find it rather than guess it. Look up what your exact model, year and mileage is actually selling for today, put that in as the value and solve backwards, or take two second-hand prices a few years apart and work out the rate between them. Depreciation varies enormously between makes and between a car with a queue of buyers and one without, and no single figure covers that.