APPENDIX C

It is shown that in the discounted-value method the depreciation coefficient equals the straight-line method coefficient 1/N when the contributions follow an Anton distribution. Formula (26) can be rewritten as

Image: Formula (C1)

Image: Formula (C2)

Substituting (5) into (C2) we have

Image: Formula (C3)

Since the first term of (C3) is a geometric series, we have

Image: Formula (C4)

After some standard algebra it readily follows from the above that

Image: Formula (27)


Goto: The previous section (Appendix B)
Goto: The contents section of Ruuhela, Salmi, Luoma and Laakkonen (1982)
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Department of Accounting and Finance, University of Vaasa,
Finland

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