Straight Line (SL)

This method assumes a constant depreciation value per year.

Assuming that the price of a depreciating asset is $P$ and its salvage value after $N$ years is $S$, the annual depreciation is:

\[  \frac{P-S}{N}  \]

For our example, the annual depreciation would be

\[  \frac{\$ 20,000-\$ 5,000}{5}=\$ 3,000  \]