Essential Mathematical Formulas for PMP Certification Test
A = B + C
Example
Imagine you buy a computer for your project that costs $2,000 and you expect it to last for 4 years. Using straight-line depreciation, you divide the cost ($2,000) by the number of years (4) to determine the annual depreciation.
The formula for straight-line depreciation is:
\[ \text{Annual Depreciation} = \frac{\text{Cost of Asset}}{\text{Useful Life}} \]
So, in this case:
\[ \text{Annual Depreciation} = \frac{\text{\$2,000}}{4 \text{ years}} = \$500 \text{ per year} \]
Therefore, with straight-line depreciation, you would record $500 as the annual depreciation expense for the computer in your project’s accounts. This method helps evenly spread out the cost of the asset over its expected useful life, allowing for a systematic way to account for the reduction in value of the asset over time.
