Excel Financial Functions

Question

Time to learn some new functions! Depreciation is the process by which a company spreads the expense of

an asset over its useful life. Even though a company may actually pay for the asset immediately, they

deduct that expense in pieces slowly over the time that the asset is used.

Assume that your company buys a new machine to take the pits out of peaches before the peaches are

canned. The peach pitter has an initial value of $65,000. The useful life of the equipment is 7 years with a

salvage value of $4,000. What is the yearly depreciation expense, assuming straight line depreciation? Use

the SLN function to do this calculation. To learn this function, go to “Financial” functions in the function

library and select SLN. See if you can figure out the required arguments. If you can’t, try and Google the

function. If you still have problems, ask for help.

Answer 1

fx SLN:

Returns the straight-line depreciation of an asset for one period.

Syntax

SLN(cost,salvage,life)

▪ Cost: is the initial cost of the asset.

▪ Salvage: is the salvage value at the end of the life of the asset.

▪ Life: is the number of periods over which the asset is being depreciated (sometimes called the useful life of the asset).

The explanation above can be found in the formula builder or help.

Use the formula builder or just type the following In any active cell and press the Enter/Return button:

=SLN(65000,4000,7)

Answer:

Which tis the annual straight line depreciation expense for the useful life of the equipment.