Applications
1 Enter declining factor, press SAVE .
2 Enter 100 (100% of depreciation), press ×.
3 Enter number of years, press ÷ to obtain multiplier.
4 Press STO.
5 Enter present value of asset.
6 Press RCL, press % to obtain first year’s depreciation.
7 Press – to obtain remaining book value in first year.
8 Repeat steps 6 and 7 to obtain each succeeding year’s depreciation and remaining book value until the book value is equal to or less than the salvage value. In the latter case, the previous book value is reduced by the salvage value to obtain the final year’s depreciation.
Sample Case: A fleet car has a value of $2500, a salvage value of $400 which is not deducted from the present value, and a life expectancy of six years. If you are using the double declining balance method, what is the amount of depreciation and book value for years 1-4?
Solution
 Enter:  See Displayed:  
 
2 SAVE  100 × 6 ÷   
  33.33
  multiplier
 
STO 2500 RCL %   $
  833.33
  1st year depreciation
 
–   $
  1666.67
  remaining book value
 
RCL %   $
  555.56
  2nd year depreciation
 
–   $
  1111.11
  remaining book value
 
RCL %   $
  370.37
  3rd year depreciation
 
–   $
  740.74
  remaining book value
 
RCL %   $
  246.91
  4th year depreciation
 
–   $
  493.83
  remaining book value
Note that an asset cannot be depreciated beyond salvage value—therefore, depreciation for year 5 would be $93.83 and book value $400.

Discounted Cash Flow Analysis

For capital budgeting purposes, it is often required that a discounted cash flow analysis be performed to see if a particular investment is at least as profitable as some norm (often called the cost of capital or discount rate).
This calculation finds the present values of all the future cash flows (appropriately discounted by cost of capital) less original investment.
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