Motor Road Transport For Commercial Purposes
(Liquid Fuel, Steam, Electricity)

INTEREST ON CAPITAL EXPENDITURE 137 a vehicle cost £1,000, the life be taken at twelve years, depreciation be fixed at 15 per cent—thus giving on a compound basis a scrap value only for the van at the end of twelve years—and interest at 6 per cent., the following result is obtained— First Year. Depreciation on ^1,000 . . . . ^150 Interest on ^1,000 ..... £60 Second Year. Depreciation on £850 . . . . . ^127 Interest on ^850 . . . . . ^51 and so on. In this way the depreciation and interest are taken on the constantly diminishing value of the machine, which will give its correct worth at any time. Illustrative Tables. Below will be found some tables which. have been worked out for vans of an initial price of £1,000. These lists show the value of the van each year of its life, together with. the annual charges for depreciation and interest. These can be split up easily into weekly charges. It is a simple matter to make from these tables, others based on initial prices such as £1,250, £500, £750, £250, and so on. The figures are expressed in pounds only. Fractions exceeding a half have been counted as one pound. 5 Years’ Life : 32| per cent. Depreciation Value of Vehicle at end of: Depreciation 32|% Interest at 6% £ £ £ £ Ist 1,000-325 = 675 325 60 2nd 675-219 = 456 219 40 3rd 456-148 = 308 148 27 4th 308-100 = 208 100 18 5th 208- 68 = 140 68 12 .£140 = “ scrap ” price at end of 5 years