Depreciation and Investment Analysis

These flashcards cover key terms and concepts related to depreciation, investment analysis, and financial calculations discussed in the lecture.

Depreciation

The allocation of the cost of a tangible asset over its useful life.

MACRS-GDS

Modified Accelerated Cost Recovery System - General Depreciation System, which provides a way to calculate depreciation for tax purposes.

Salvage Value

The estimated resale value of an asset at the end of its useful life.

First Cost

The initial purchase and installation cost of an asset.

Replacement Analysis

A method to determine when to replace an asset based on cost considerations.

Optimum Replacement Interval

The ideal time period to replace an asset based on balancing costs.

IRR (Internal Rate of Return)

The discount rate that makes the net present value of an investment zero.

Annuity

A series of equal payments made at regular intervals.

Present Worth (PW)

The current worth of a cash flow, discounted to the present.

Maintenance Costs

The ongoing costs required to keep an asset operational.