The gradual decrease in the value of an asset over time due to wear, age, or obsolescence.
Depreciation allocates the cost of a tangible asset over its useful life. It appears as an expense on financial statements, reducing taxable income.
A $50,000 vehicle with 5-year life: Straight-line depreciation = $10,000/year. After 3 years, book value = $20,000.
The yearly cost of borrowing money expressed as a percentage, including fees and interest.
Interest calculated on both the initial principal and the accumulated interest from previous periods.
The process of spreading loan payments over time so each payment covers both principal and interest.
A ratio measuring the gain or loss from an investment relative to its cost, expressed as a percentage.
The total value of all assets minus all liabilities, representing overall financial health.
The ownership value in an asset after subtracting any debts owed against it.