Depreciation & interest for medical equipment"

In tatooheene: Technology Appraisal Toolbox for Health Economic Evaluations in the Netherlands

knitr::opts_chunk$set(
  collapse = TRUE, comment = "#>", fig.width = 7, fig.height = 4, dpi = 120
)
library(tatooheene)

What this vignette covers

• The formula and meaning of the annuity factor and the annual depreciation and interest charge.
• How to call depreciation_interest() and interpret its outputs.
• Edge cases: zero interest rate and validation checks.

Background & formulas

Let:

• $k$ = annual depreciation and interest costs,
• $V$ = replacement value,
• $R$ = residual value at end of period,
• $n$ = depreciation period (years),
• $i$ = annual interest rate (decimal),
• $a_{n,i}$ = annuity factor.

Annual depreciation + interest:

$k = \frac{V - \frac{R}{(1 + i)^N}}{a_{n,i}}$.

Annuity factor:

$a_{n,i} = \frac{1}{i}*\bigg(1-\frac{1}{(1 + i)^{n}}\bigg)$.

Quick starts

Default (returns a data frame)

depreciation_interest(
  v_replace_val = 50000, # replacement value 
  r_salvage_val = 5000   # salvage value at end of period 
)

Only the annuity factor

depreciation_interest(
  v_replace_val = 50000,
  r_salvage_val = 5000,
  output = "annuity_factor"
)

Only the annual cost (k)

depreciation_interest(
  v_replace_val = 50000,
  r_salvage_val = 5000,
  output = "annual_cost"
)

Zero‑interest edge case

When $i$ = 0, the function uses the mathematical limit:

• $a = n$,
• $k = (V - R)/n$.

depreciation_interest(
  v_replace_val = 50000,
  r_salvage_val = 5000,
  n_amortisation_period = 8,
  i_interest_rt = 0,
  output = "dataframe"
)

Input validation & common messages

• v_replace_val must be a single positive number; r_salvage_val a non‑negative number.
• n_amortisation_period must be > 0; i_interest_rt must be ≥ 0.
• If salvage value exceeds replacement value, a warning is raised (allowed, but uncommon).

Example (triggers an error):

depreciation_interest(
  v_replace_val = 50000,
  r_salvage_val = -1
)

tatooheene documentation built on Dec. 15, 2025, 5:06 p.m.