ANNUITY METHOD OF DEPRECIATION

A depreciation method centered around constant rate of return and costs recovery upon any asset that is being depreciated. It is a method which obliges the internal rate of return (IRR) to be determined on the cash outflows and inflows of the asset. The IRR is afterward multiplied by the asset's initial book value, and the result will be deducted from the cash flow within the period to arrive to the actual amount of depreciation that could be taken.