Residual value

An asset's residual value is the estimated amount that it will be worth at the end of its useful life. The concept is one of the factors needed to derive the amount of lease payments to be charged to a lessee. It is also commonly used in cash flow analysis to determine the net present value of a proposed investment. If the amount is minimal it may be assumed to be zero, especially if the useful life of an asset is quite long.

Related Courses

Accounting for Leases
Capital Budgeting
Fixed Asset Accounting