Commercial equipment
Equipment replacement reserve
Find deposits to fund a specified future replacement cash gap.
Your inputs
Complete the fields for your selected method. Zero means intentionally zero, not unknown. Currency selection labels amounts; it does not convert exchange rates.
How this calculation works
deposit=(future cost-future existing funds)*i/((1+i)^n-1).
Future replacement amount already includes assumed inflation. Existing funds compound from now; equal deposits occur at each year end. Return is an assumption; reserve deposits are not duplicate lifecycle expenses.
What information do I need?
Use records for the same job, equipment or accounting period. Only the fields for your selected entry method are required. An unknown amount is not zero.
Input definitions and where to find them
- Future replacement cash amount (selected currency): Future replacement amount already including assumed inflation.
- Existing earmarked funds now (selected currency): Current earmarked funds that earn the supplied return from now.
- Annual effective reserve return (%): Explicit owner-selected scenario rate matching the period and nominal/real cash-flow basis; not a guaranteed return.
- End-of-year deposits until replacement (years): Use matching records or a clearly identified owner assumption for end-of-year deposits until replacement, in the displayed unit and the stated row/period scope.
Use the Where to find this value controls beside the inputs for available work-it-out helpers. Estimates remain your assumptions; a helper does not verify the source figures.
Worked example
Example amounts use US dollars (USD).
Example answer: Required end-of-year annual deposit is $2,464.62 for the illustrative inputs below.
Example inputs
- Future replacement cash amount: $20,000.00
- Existing earmarked funds now: $5,000.00
- Annual effective reserve return: 5.00 %
- End-of-year deposits until replacement: 5 years
- Required end-of-year annual deposit
- $2,464.62
- Existing funds at replacement date
- $6,381.41
- Remaining future funding gap
- $13,618.59
These illustrative values are not recommended rates or industry averages. Replace every example input with your own figures.
Use the result well
Find deposits to fund a specified future replacement cash gap.
Keep inputs on the same scope and time basis. Calculations retain precision internally; displayed values generally round to two decimal places, with extra precision for very small values and whole-unit rounding where required. Economic comparisons describe your supplied assumptions and do not guarantee future results.
This tool provides business arithmetic. It does not approve engineering designs, establish legal or tax treatment, select equipment or certify safe operating conditions.