From the course: Excel: Financial Modeling with Dynamic Arrays

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Building a dynamic depreciation waterfall schedule

Building a dynamic depreciation waterfall schedule - Microsoft Excel Tutorial

From the course: Excel: Financial Modeling with Dynamic Arrays

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Building a dynamic depreciation waterfall schedule

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- [Speaker] Let's dig a little bit further now with the depreciation schedule and look at how to model a depreciation waterfall. When we're purchasing multiple items in different years, we need to calculate each year separately. We need to show the amount that's been spent on the cash flow and the depreciation we need to show on the income statement. We will also need to add inflation for later years, and we also assume that the asset is purchased part of the way through the year. So we also need to account for that. So let's take a look at how to calculate this in Excel using dynamic arrays, of course. So firstly, we need to calculate the capital expenditure. So it will take our $50,000 here in the first year, and then we need to escalate that across the years, and we can do that using the SEQUENCE function here. So just like we did in the last chapter, we'll say, multiplied by one plus our inflation to the power of our escalation. There we go. Okay, so that is the amount that we…

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