ABSTRACT
This is the only method in which interest is considered on the accumulated annual depreciation costs. In other words, the use of compound interest is involved by establishing an annuity plan as discussed in Chapter 5. Equation (5.12) can be rewritten as:
Ad = (Vo - Vs) (1 + i)n - 1 (6.7)
where (Vo - Vs) is the sum of the annuity accumulated in n years, which represents the amount of depreciable investment of an asset.
