Capital equipment needs to be depreciated over time. The simplest method is straight line depreciation, whichs assumes that the decline in value is constant over the lifetime of the product.
Parameters:
(1) purchasing cost
(2) value at end of usage interval (resale value, other)
(3) number of years in the usage interval
(4) average number of events using the device per year
depreciation per year =
= ((purchasing cost) - (value at end)) / (number of years)
cost of device per event per year =
= (depreciation per year) / (number of events)
Some assumptions in the equations:
(1) the change in value is constant
(2) maintenance and cost of expendables are accounted for separately
(3) the number of events per year is relatively constant
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