What is appliance depreciation?
Appliance depreciation refers to the loss in value of household devices over time due to wear and tear. Key terms include:
- Depreciation Rate (DR): The percentage of value lost each year.
- Actual Cash Value (ACV): The current value of the item (Replacement Value - Depreciation).
- Replacement Cash Value (RCV): The cost to buy a new equivalent item today.
How to calculate depreciation?
The formula used is:
ACV = RCV - (Age × Rate × RCV)
Where Age is in years and Rate is the annual depreciation percentage.
Example
For a space heater (Rate: 6.67%) that is 4 years old and costs $75 to replace:
Depreciation = 4 × 0.0667 × 75 ≈ $20.01
ACV = $75 - $20.01 = $54.99
Appliance Depreciation Rates
This calculator includes standard rates for common appliances like:
- Refrigerators: 12.50%
- Dishwashers: 12.50%
- Microwave ovens: 10.00%
- Washers/Dryers: 12.50%
- Space Heaters: 6.67%