From Yahoo Finance: 2025-03-23 17:42:00

Residual value is the estimated worth of an asset at the end of its useful life, vital for calculating depreciation, lease agreements, and tax deductions. Factors like initial cost, depreciation method, market demand, condition, and technological advancements influence residual value. It’s crucial in automotive, equipment leasing, and investment planning.

Businesses use residual value to make decisions on asset management, cost recovery, and long-term financial planning. It’s key in calculating depreciation for tax purposes and determining final lease costs. Investors evaluate asset longevity and resale potential using residual value. Market value fluctuates based on supply and demand, while residual value is predetermined at purchase or lease.

Residual value affects depreciation, lease terms, taxes, and investment choices. It’s crucial for equipment purchases, property leases, and future planning. A financial advisor can help lower tax liability and match you with the right advisor. Use SmartAsset’s tax return calculator to see how income and deductions impact your refund.

Read more: Meaning, Examples, How to Calculate