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Be it a loan that you have borrowed from a bank or an expensive intellectual property that you have purchased recently, it is going to cost you over the years until they are paid off or expire. Amortization is a method that is used for both expensing the loans and spreading the cost of intangible assets for businesses over their useful lives. An annual amortization will define the value that will be expensed in a year during the useful life of an asset or during the loan tenure.
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The calculation of annual amortization can do just that for you by showing you the total value that you owe the bank or other creditors in the coming year. It can also show you the expensed yearly value of an intangible asset during its life cycle. Let's find out more about annual amortization.
Amortization defines the process of paying off debt over time in equal monthly installments, Also, it is used widely for spreading the cost of intangible assets over time. The cost of these payments that occurs during a year can be defined as annual amortization.
You can calculate the amortization with by complete below mentioned two steps:
In the first step, you will calculate the monthly EMI amount, which you can do with the help of the following formula:
The second step is to multiply the EMI by with 12 in order to get the annual amortization amount. It might be a complex calculation if you do not have a good experience in financial accounting. Fortunately, there is another way of doing this. An online calculator such as the Annual Amortization Calculator which is designed by iCalculator could solve your equation with just a few clicks, Let's see how the calculator works.
In order to get the annual amortization from the calculator, the following details would be required from you:
Just by entering the above information, the calculator will provide you with a chart that will contain your desired results. Let's see how using the calculator will benefit you.
The Annual amortization calculator is online and easy to use, that provides you with the detailed chart that contains the following details:
You will be able to see the results for as long of the loan term as you want, which will help you decide on what is the yearly payment that you will be able to afford.
The calculator can be used for already running loans as well, just so you know what you are actually paying.
As explained above you may also use the calculator to spread the cost of your intangible assets such as copyrights, patents, trademarks etc. This is done by simply replacing the loan amount with the cost of asset, loan term, with the useful life of the asset and interest rate with the estimated rate on which the asset will be expensed.
The results obtained from the calculator can be noted and saved for comparisons of loan offered by various banks as well as to compare the cost of assets.
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