Residual Value Calculator

Formula

To calculate the residual value:

\[ RV = C - (C \times D \times A) \]

Where:

$RV$ is the residual value
$C$ is the original cost of the item
$D$ is the annual depreciation
$A$ is the age of the asset in years

What is Residual Value?

A residual value is defined as the total worth of an object or asset after a certain time period of use has passed. This is typically used when describing depreciating assets like cars or appliances. The residual value can help determine the asset's value for resale, accounting purposes, or financial planning.

Example Calculation

Let's assume the following values:

Original Cost (C) = $20,000
Annual Depreciation (D) = 0.10 (10% per year)
Age of Asset (A) = 5 years

Use the formula:

\[ RV = 20000 - (20000 \times 0.10 \times 5) = 20000 - (20000 \times 0.50) = 20000 - 10000 = 10000 \]

The residual value of the asset after 5 years is $10,000.