SYD Function (Functions in Excel)

Purchase Value Of A New Car	£20,000
Second Hand Value	£8,000
Number Of Years Ownership	6
Deprecation in year 1	£3,429	=SYD(F3,F4,F5,1)
Deprecation in year 2	£2,857	=SYD(F3,F4,F5,2)
Deprecation in year 3	£2,286	=SYD(F3,F4,F5,3)
Deprecation in year 4	£1,714	=SYD(F3,F4,F5,4)
Deprecation in year 5	£1,143	=SYD(F3,F4,F5,5)
Deprecation in year 6	£571	=SYD(F3,F4,F5,6)
Total Depreciation :	£12,000	=SUM(F7:F12)

What Does It Do ?

This function calculates the depreciation of an item throughout its life, using the sum of the

years digits.

The depreciation is greatest in the earlier part of the  items life.

What is the Sum Of The Years Digits ?

The sum of the years digits adds together the each of the years of the life.

A life of 3 years has a sum of 1+2+3 equalling 6.

Each of the years is then calculated as a percentage of the sum of the years.

Year 3 is 50% of 6, year 2 is 33% of 6, year 1 is 17% 6.

The total depreciation of the item is then allocated on the basis of these percentages.

A depreciation of £9000 is allocated as 50% being £4500, 33% being £3000, 17% being £1500.

		£9,000
1	17%	£1,500
2	33%	£3,000
3	50%	£4,500

As the greater part of the depreciation is allocated to the earliest years the values are

inverted, year 1 is $4500, year 2 is £3000 and year 1 is £1500.

Example 1

Purchase Price Of A Car :	£10,000
Salvage Value :	£1,000
Expected Life in Years :	3
				As % Of Total Depreciation
Depreciation in Year 1 :	£4,500	===>		0.5
Depreciation in Year 2 :	£3,000	===>		0.333333
Depreciation in Year 3 :	£1,500	===>		0.166667
	=SYD(E39,E40,E41,3)

1. Add together the digits of the Life to get the SumOfTheYearsDigits, 1+2+3=6.

2. Subtract the Salvage from the Purchase Price to get Total Deprectation, £10000-£1000=£9000.

3. Divide the Total Deprectation by the SumOfTheYearsDigits, £9000/6=£1500.

4. Invert the year digits, 1,2,3 becomes 3,2,1.

5. Multiply 3,2,1 by £1500 to get £4500, £3000, £1500, these values are the depreciation

values for each of the three years in the life of the item.

Example 2

The same example using 4 years.

Purchase Price Of A Car :	£10,000
Salvage Value :	£1,000
Expected Life in Years :	4
				As % Of Total Depriciation
Depreciation in Year 1 :	£3,600			0.4
Depreciation in Year 2 :	£2,700			0.3
Depreciation in Year 3 :	£1,800			0.2
Depreciation in Year 4 :	£900			0.1
Total Depreciation :	£9,000			100%

Example 3
This example will adjust itself to accommodate any number of years between 1 and 10.
		Purchase Price Of A Car :	£10,000
		Salvage Value :	£1,000
		Expected Life in Years (1 to 10) :	7
						As % Of Total Depriciation
	Year	1	£2,250			25%
	Year	2	£1,929			21%
	Year	3	£1,607			18%
	Year	4	£1,286			14%
	Year	5	£964			11%
	Year	6	£643			7%
	Year	7	£321			4%
	Year
	Year
	Year
			£9,000			100%
Syntax
=SYD(OriginalCost,SalvageValue,Life,PeriodToCalculate)
Formatting
No special formatting is needed.

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